As all hopeful first home buyers are aware, it is not easy to pull together a deposit. With climbing interest rates, it is also becoming more and more difficult to service a mortgage.

Kāinga Ora (the Crown entity responsible for providing public housing, home related financial assistance and initiating and undertaking urban development) has come up with some creative options for helping first home buyers (and sometimes purchasers who have owned a home before, if circumstances allow) into their homes. We have summarised the options below.

First Home Partner

The First Home Partner scheme allows first home buyers to receive a direct financial contribution from Kāinga Ora of up to $200,000 or the equivalent to 25% of the total purchase price, whichever is lower.

This is not a loan or grant but rather a joint ownership scheme whereby Kāinga Ora take a percentage share in the property that is equal to the amount that it has provided. If Kāinga Ora contributes 20% of the purchase price, it will own 20% of the property, and will take 20% of the sale proceeds when the property is sold (unless you have purchased part or all of Kāinga Ora’s share, in which case the sales proceeds received by Kāinga Ora will be reduced accordingly). You will need to gain the approval of Kāinga Ora before selling and before undertaking renovations or improvements.

You will still be able to borrow from a bank to assist with the remaining purchase price, but Kāinga Ora will not help you repay the loan. Kāinga Ora will not contribute toward the usual household expenses (including but not limited to rates, insurance and body corporate fees if relevant).

In order to be eligible for the First Home Partner scheme, you need to be purchasing a new home, have at least a 5% deposit (which can include KiwiSaver), a total household income of less than $130,000 per annum (before tax) and commit to living in the home for three years following settlement.

If you are using the First Home Partner scheme, you will need to ensure that your sale and purchase agreement has been drafted or at least reviewed by your lawyer prior to signing, as Kāinga Ora has strict guidelines for what must be included in the agreement. It can be a costly mistake to sign something without having it checked beforehand.

If you think you may be eligible and would like to know more, please get in touch.

First Home Loan

The First Home Loan is different to the First Home Parnter. It allows qualifying first home buyers who only have a 5% deposit to borrow the remaining 95% of the purchase price from the bank. Kāinga Ora underwrites the borrowing which allows banks to go beyond what their usual lending criteria allows. To be eligible for this you must meet the income cap criteria. There is no house price cap under the scheme.

First Home Grant

The First Home Grant is a direct financial contribution from Kāinga Ora of between $3,000 - $10,000, per eligible person.

There are income caps which will affect your eligibility for the grant. You must also have KiwiSaver and have been contributing the minimum amount to your KiwiSaver for three years.

There are house price caps for the First Home Grant which differ depending on whether the house is existing or new, and which region the property is in.

Summary

Kāinga Ora has created some great products to assist with home ownership. There are a handful of participating banks that work with Kāinga Ora to provide assistance. We can provide you with contact details if you would like to discuss lending options further with an expert.

This is a snapshot of the possibilities that exist. If you have any questions please contact Ruby Haddon, Senior Solicitor (DDI 03 343 8586 / ruby@mmlaw.co.nz).