James PuahAre you thinking about buying your First Home? Do you know there are ways you can buy a suitable home? When we started the Kiwi First Home Buyers Group over 10-years ago, house prices were a lot lower and the group was relatively smaller. Over the years we have grown to about 60,000 members and have helped answer so many questions about buying a first home. We’ve witnessed the real frustrations that many people have.
Most is concern about how expensive it is to buy your own home!
Many first-home buyers nowadays are a little older and have their own families. This means they need more than a 1-bedroom apartment or flat but may seem harder to achieve. They can’t afford the mortgage needed to buy a suitable home.
What if I could share with you a way to get into a more suitable home today?
In many cases first home buyers may have been to a bank or mortgage broker to get their finance pre-approved, only to find that it’s not going to be enough to buy the appropriate house for them.
Often, first home buyers will rely on the First Home Loans by Kainga Ora as it allows them to buy with a lower deposit – from 5% deposit. The problem with the First Home Loans scheme is that the banks apply conditions to the assessment that make affordability harder.
You may even be able to buy a home, but if you could spend a bit more then you could buy something much better. Maybe you can buy a brand new 3-bedroom home instead of a 2-bedroom flat.
Developers need to Sell
There are great opportunities available in the market where property developers and builders built homes to sell.
They have built homes like those pictured in Mt. Roskill, Auckland where they probably expected to sell over $1Million, but in a soft property market – they are prepared to sell at a discount. They need to sell these brand new, 3 bedroom, 3 bathroom (3 ensuites) homes with an office room and internal access garage and you might be able to buy one of these for something around $925,000 +/-.
Shared Home Ownership – a way to buy Your First-Home
You can borrow less and still buy for more with First Home Partners.
This is how it could work for you:
- Deposit – you need to have a minimum 5% deposit and Kainga Ora can provide shared ownership for up to $200,000 (or max 25%) when you buy a brand new home. On a house purchased for $925,000 (like the one pictured if you can purchase for that price) that would mean that you would need a deposit of $46,250 and this can include your KiwiSaver.
- Home Loan – with a 5% deposit and on a home purchased for $925,000 you could get Kainga Ora to provide up to $200,000 (about 22%) so you then need to borrow $678,750. The banks treat your application as if you have a deposit of $246,250 (27%) and so it’s easier to get approved and you will get the best deals too as you are treated as if you have over 20% deposit.
Because you are able to use a shared ownership for up to $200,000 it means that you have a smaller and more affordable mortgage. The difference could mean that you can buy a home that would suit your family.
Shared ownership is not quite the same as owning the house on your own, and the aim is to buy the house outright within 15-years. While not the same, it is certainly a good way to get into a new home today and even if it takes 15-years to buy the home outright then is that worse than staying renting?
It’s not going to work for everyone, and there may be another option; however you should get the guide that explains about shared home ownership and how the First Home Partners works.
