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Can I really afford a house?

Earlier this year The New Zealand Herald ran a story about New Zealand’s most and least affordable cities, and the news was not flash for first home buyers.

“Tauranga is the world’s fifth costliest housing market when prices are compared to incomes, worse than London and many major American cities, and still outstripping Auckland”.

Saving up for that first home deposit is tough at the best of times and with prices rising quicker than wages, the maths and timeframes involved can simply seem impossible, even to those middle-tier income earners. Amid a global pandemic and the related economic uncertainty, you’d think things might have gotten even more unrealistic. But recent legislation changes and continued access to other forms of support, schemes and grants means you might not want to give up on that kiwi quarter acre dream quite yet.

The biggest change has come due to the loan-to-value ratio (LVR) restrictions removed due to COVID-19. You will still need a deposit and some financial stability but are no longer necessarily required to have a 20% deposit to secure a home loan. Requirements and specifics will differ between banks and lenders, but this is great news for first home buyers.

Another fantastic way to boost that deposit is to utilise your KiwiSaver. If you have contributed for at least three years you may be able to withdraw some of your savings from your KiwiSaver account or be eligible for a First Home Grant.

This provides eligible first-home buyers with a grant of up to $5,000 for individuals and up to $10,000 where there are two or more eligible buyers. This potential grant doubles for new properties. The most important thing with this scheme is to be sure to apply early, at least 20 days before settlement, as once you’ve made the purchase it’s too late to apply for the grant.

The First Home Grant is applied for via Kāinga Ora, a government initiative to enable a more cohesive approach for housing and urban development in New Zealand. They also facilitate another scheme known as the First Home Loan. It’s designed for first home buyers who can afford to make regular repayments on a home loan, but have trouble saving for a large deposit. With a First Home Loan you may only need a 5 percent deposit!

At Cashmores we do real estate for real people. Sure we have some luxury homes but we often get listings that would be suitable for first home buyers utilising these various forms of assistance. It’s not all doom and gloom and with a bit of research, foresight and planning that first home might not be as far off as you think.

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