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Find your way onto the property ladder

One of the biggest challenges first home buyers find is raising a deposit. The media has frequently reported over the last months how real estate agents were seeing less first-home buyers attending open homes and auctions.

The Reserve Bank's restrictions on lending for over 80% of the value of your property have been in place for quite some time now. Though this rule did tighten the market for those with a small deposit, it never meant that borrowers could not get a loan if they had less than 20% deposit. The general consensus now is that banks have quite a good handle on the restrictions and it is possible to get a pre-approval with a small deposit as long as other conditions are met.

  • Know your options. With a bit of planning and good advice you can find yourself on track to getting into your first home in no time, even if you don't have a 20% deposit. But it is important to know the options that are available to you, and which one will fit your circumstances.
  • Getting support from family members. Some people are lucky enough to have a supportive family that can help them with their deposit. Parents and family members are sometimes happy to help, but don't know how if they don't have actual cash to lend. Some lenders offer parents viable options to help their children into their first home. It involves using the parent's existing property as security for their children's home loan and there are ways to limit the risk to the parents.
  • Welcome Home Loan. The Welcome Home Loan Scheme, supported by Housing New Zealand, allows people to apply for a loan with a 10% deposit. There are limitations in terms as how much you can borrow, depending on where you want to buy your first home. There are also conditions around income caps. This is for owner occupied properties only, so it can be a good option depending on your circumstances.
  • Using KiwiSaver for your deposit. There are two ways KiwiSaver members can use their funds to raise their deposit. Members that have been in the scheme for at least three years might be able to withdraw their savings, employer contributions and returns. The second option is a deposit subsidy that allow members to receive $1,000 for each year of contribution to the scheme.
Image courtesy of ponsulak / FreeDigitalPhotos.net