Make The Most of Government Schemes to Help You Get Your First Home
Buying your first home is an exciting new step for anyone but requires vigilant planning and budgeting. If you’re beginning to prepare a plan to buy your first home, or if you’ve already begun saving your deposit, it’s worth finding out how Kiwisaver and the Welcome Home Loan Scheme can benefit you. So we have created this guide to the different government schemes that you may qualify for to help, and how to use them to get into your first home sooner.
KiwiSaver Savings Withdrawal
Once you have been contributing to your KiwiSaver account for three years, you will be eligible to withdraw most of the funds saved to use towards your first home deposit. You won’t be able to use any government contributions, this includes the $1,000 kick-start and member tax credits.
KiwiSaver Deposit Subsidy
Based on your eligibility, the government may be able to give you another $1,000 for every year you’ve contributed to KiwiSaver (up to $5,000) towards the deposit for your first home.
Welcome Home Loan
As long as the property you’re looking at fits in the price caps for each region, you may also qualify for the Welcome Home Loan. This scheme means that instead of having to have saved 20% of the cost of the house for the deposit, they can accept 10% instead.
How to Use Them to Get Your First Home
Firstly you will need to figure out how much you will need to save for a deposit, so you can figure out how far away you are from your first home. This is likely to depend on the location, size and features of the house or land you’re looking into buying.
Most lenders require a deposit of at least 20% of the amount you’re borrowing, but if you’re eligible for the Welcome Home Loan Scheme you’ll only need a 10% deposit. Find out if you’re eligible and then what either 20% or 10% of the cost of the kind of house you’d be interested in is and start from here.
Once you have been in Kiwisaver for three years, you will be eligible to withdraw most of the funds saved to use towards your deposit. Just remember to exclude any government contributions or tax credits. Additionally, you may qualify for the KiwiSaver deposit subsidy, which will give you $1000 for every year you’ve contributed to your account.
Once you have added all these benefits up, you should have a rough figure of what you’d need as a deposit. Make sure it fits in with any price caps for your area ($485,000 for Auckland to give you an idea), and ensure you’re eligible for each of the schemes you include in your plan. If it doesn’t, reconsider your options and maybe look at something or somewhere more affordable.
Now you just need to figure out a budget, don’t be afraid to use facilities like the Money Planner on Sorted.org.nz to make it easier. Once you have created your budget you have an idea of how far away you are, and what needs to be done to get to your deposit amount. If your mortgage repayment will be more than the amount you spend on rent, start putting the difference into savings. Remember it’s worth sacrificing non-essentials to eventually live in a home you can call your own.
Disclaimer: The above information is general in nature and not intended to be financial advice. You should consider seeking professional advice before following any suggestions in this blog/website.