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Mortgages Q2 2016: First Home Buyer deposits

Wealth Works Mortgage Broker Kim Gallie shares the latest Mortgage updates plus give shares a range of deposit options for the first home buyer... 

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Q2 has been another big quarter for the property market and for those looking to borrow money, with the interest rates remaining at all-time lows!  However, Reserve Bank Governor Graeme Wheeler is now starting to talk about making changes later in the year where he will potentially further restrict Loan to Value Ratio’s (LVR’s). They may even start to limit debt to income multiples, which will have a big impact on what you can borrow. So if you’re looking to borrow money, I would suggest you do it sooner rather than later in case the rules do change.

First Home Buyers | Deposit Options
Being a first home buyer remains difficult and without the ability to save a large deposit it’s become necessary to look at other options, of which there are a few, some of which I have listed below:

  • A gift – this is when someone gifts you funds to contribute to the purchase of a property.  This is usually someone like your parents or a close relative.  The funds must be exactly that, a gift, and cannot come with the requirement of repayment of the principal or attract any interest. 
  • An Acknowledgement of Debt can be set up – again this is essentially where someone close to you temporarily provides you with funds, which may be repayable at the time of the sale of the property for example.  A solicitor would draw up this document for you and if worded correctly, the banks will accept this. 
  • If you are going to live in the property you can withdraw most of the funds from your Kiwi Saver, if eligible.  Similarly, you may also qualify for a Housing NZ Home Start Grant.
  • Having a Guarantor may also assist you in getting into your first home.  A guarantor is someone who provides extra security by ‘guaranteeing’ a portion of a loan - usually the deposit. The guarantor can use the equity in their existing property as a guarantee, rather than using their savings upfront.
  • Buying your new home jointly with family can also be a solution.  With their additional income and savings in the picture, you may qualify for more than you would on your own.  The property would also need to be jointly owned.

If you or someone you know is trying to get into their first home, these are a few options that could make it work.  If you would like to know more simply get in touch today on 09 306 5820 to discuss.

Kim Gallie |
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