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Low Deposit Options
Low deposit options for first home buyers.
First home buyers have a handful of low deposit options to help them get into a house.
1. Help from your folks – a gift.
If you’ve got people who can help in this way then lucky you! The gift doesn’t have to be for a full 20% but could be the difference after any cash you bring to the table from Kiwisaver, your own savings or whatever you can get for a kidney.
2. Help from your folks – a guarantor.
This is a useful low deposit option in the Auckland market simply because house prices are where they are and most people can’t click their fingers and magic up 20% of $500,000. It could be say 5% cash from you plus a guarantee equal to 15%. This option involves someone (usually mum and dad) letting you use the equity in their house to make up the deposit for your house. Its not just for Aucklanders though, works well anywhere!
The beauty of this option is that you don’t necessarily need a huge cash deposit to get into a property. In fact you may not need any cash at all. Plus the LVR restrictions won’t apply to you and you can get the best interest rates going.
3. Building a new house is an option.
Do you fancy building a brand new house as your first house? Getting into a new subdivision with a house and land package? Hell, why not! Basically you need a 10% deposit and a fixed price building contract.
4. Buying with friends.
The idea of friends pooling resources is hardly a new one but in this environment where the banks require 20% from you it could be the way forward. Maybe you’ve got 3 other mates who have all saved 5% (or at least enough between you to get to 20%). A low deposit option with a twist!
Do you think you and your mates could work through some basic questions like;
- What happens if one of us wants to sell?
- What happens if one of us can’t pay their share of the mortgage?
- How many people do you know who want to get into a place but don;t have enough deposit on their own? You’re probably flatting with them already…
Welcome Home Loans
Welcome Home Loans are targeted at those with modest incomes so this could be the low deposit option for you. There are income limits to think about - $80,000 as a single person and $120,000 as a couple or if buying as a group.
Welcome Home Loans are also aimed at people buying lower priced property so there are house price caps to think about too. The highest cap is in Auckland at $485,000 and you can check out the limits for your local town at the Housing NZ website.
Now it almost doesn’t matter where your 10% deposit comes from – so long as you haven’t borrowed it. It can be your from own savings, a gift or from Kiwisaver.
There are some specific lending criteria to think about too including minimum debt levels, length of employment and your current asset position. The type of property you want to buy is also important. Yep, there’s a few hurdles to get over so we’d recommend you call us to see if it’ll work for you.