Maximising your potential as a first home buyer

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LEGAL ADVICE

BY JULIA INGHAM

 

5 Dec, 2022

 

As the property market starts to cool down and the Government continues to incentivise home ownership, first home buyers have the opportunity to maximise their goal of home ownership.

The rules around using KiwiSaver to buy your first home have been relaxed a little, property price caps for the First Home Loan have been lifted, and there is now additional support for first home buyers available in the form of the Kainga Ora First Home Partner Scheme.

This is a great opportunity to look closely at these support packages to see what might help you take that first step onto the property ladder.

Pre-approvals are your best friend – use them as an opportunity to determine your eligibility and what amount you might receive. Applications can take up to 4-6 weeks to process so the sooner you can get your application in, the better. Make sure your finance condition in the sale and purchase agreement reflects this too.

 

KiwiSaver withdrawal

If you have been contributing to KiwiSaver for at least three years, or at least $1000 annually (whichever is lower) you may be entitled to withdraw your savings, as long as you leave a minimum balance of $1000 in your KiwiSaver account.

You also need to:

• Intend to live in the property you are buying as your main residence,

• Have never owned your own property or land before (there are a couple of exceptions to this, ask your advisor) and,

• Have never made a withdrawal from a KiwiSaver scheme to purchase a home before.

You are only allowed to make one first-home related withdrawal from your KiwiSaver so you’ll need to decide whether you want to use the funds to pay the deposit on the property, or on settlement. If you want to use them to pay some or all of your deposit, you’ll need to make it clear to the vendor that you are using KiwiSaver for the deposit, as they’ll need to agree to hold the funds until settlement – they won’t be able to access them right away.

 

First Home Grant

If you have been contributing to KiwiSaver for at least three years and,

• Have a household income (before tax) of less than $95,000 per year (one person), less than $150,000 (two or more people), or less than $150,000 per year (one person with dependents)
• Are purchasing or building your first home; and
• Are planning to live in the house for at least six months from settlement/completion;

You may be entitled to a First Home Grant. The First Home Grant ranges from $3000 to $5000 per member for existing homes and $6000 to $10,000 for a new home or land to build on.

The property needs to have a purchase price within the regional price cap, which for Kaipara is $525,000 for an existing home (or $875,000 for a new home).

You will also need to show you have a deposit that is 5 percent or more of the purchase price of the property, which can include any KiwiSaver first home withdrawals, the First Home Grant, savings or funds gifted by a relative. You can only receive the First Home Grant once.

 

First Home Partner Scheme (FHPS)

The FHPS is a new scheme which assists qualifying first home buyers. Kainga Ora will contribute funds (maximum of 25 percent purchase price or $200,000 (whichever is less)) towards the purchase price. In return Kainga Ora enters into shared ownership agreement for the property. It’s then up to first home buyer to purchase Kainga Ora’s share of the property back within 15 years of the settlement date (but no more than 25 years). Kainga Ora must give their consent before making any improvements or renovations, or selling the property.

You’ll need to have a total household income (before tax) of less than $130,000, good credit and a minimum 5 percent deposit towards the purchase price to qualify for the FHPS.

We recommend talking to your property lawyer, bank or financial advisor about the best financial support for your situation.

 

n To contact WRMK visit wrmk.co.nz or call (09) 470 2459.

 

First home buyers have the opportunity to maximise their goal of home ownership. PHOTO/SUPPLIED

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