The First Home Grant has ended – Now what other support options are available?

The First Home Grant, which used to provide financial assistance to first home buyers has been discontinued since 22 May 2024. Whilst the grant played a vital role in Kiwis getting into their own home, there are many other options still available to people looking to buy their first home.

What options are available to first home buyers now?

1- Kainga Ora (KO) First Home Loan scheme

The Kainga Ora (KO) First Home Loan scheme still allows eligible first home buyers to purchase a home with as little as a 5 percent deposit.

In order to qualify under this scheme, specific criteria must be met, including:

Your income should not have exceeded $95,000 in the previous 12 months if you are purchasing a property on your own and have no dependents.
Your income should not exceed $150,000 in the previous 12 months if you purchased a property independently and have dependents.
If there are more than one applicant purchasing together, the total income in the previous 12 months should not have exceeded $150,000.
A minimum deposit of five percent is required, which can be sourced from a KiwiSaver first-home withdrawal, cash savings, proceeds from the sale of an asset, or a gift from a family member.
The applicant must be at least 18 years old.
You should not own any other real estate or homes.
This loan is provided to assist you in purchasing your owner-occupied home and not for renting it out.

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2- Kiwi Saver First Home withdrawal-

If you want to buy your first home, you will still be able to access your Kiwi Saver First Home withdrawal, but unfortunately you will now not be able to apply for the First Home Grant.

Speak with your Kiwi Saver provider, who will confirm to you the amount you can withdraw. Among other things, you need to have been saving in your KiwiSaver for at least three years.

If you are eligible, you can withdraw everything in your kiwi saver account except:

The kick-start grant of $1,000 if received.
Money transferred into your KiwiSaver account from a qualifying Australian superannuation scheme.

3- Getting help from Family

First Home Buyers have the option of receiving financial assistance for deposit from parents or other family members. There has been substantial increase in the property values in New Zealand, which has made it even more difficult for first home buyers to have the required amount of deposit to purchase their first home. Many parents are helping their children with deposit requirement. As per a recent report, about one-third of current homeowners received family assistance for deposit. This number could potentially increase.

There can be various ways in which the parents or family could assist the first time home buyers. However, in these scenarios, the banks take extra care to assess if there is any likelihood of parents getting in a vulnerable position by using their property to help children and always recommend parents to assess their financial position carefully and get suitable advice from their Accountant and/or lawyer.

Read Also – Is it a good time to Refinance now?

Some parents use their savings or take a top-up if they can, to gift the required amount of deposit to their children

For example:

The purchase price $800,000
Your saved deposit $40,000
Parents’ gift $120,000
Bank loan $640,000

Using the existing available equity in their property, the parents could also give their personal guarantee limited to the amount required for the deposit.

For example:

The purchase price is $800,000
Your saved deposit $40,000
Parents’ guarantee $120,000
Bank loan $760,000

Again, using the equity, the parents could be joint borrowers together with the children for the deposit amount required to boost their low deposit to 20%, in order to get more competitive interest rates and cash back from the bank. In many cases, such joint loans are repayable over a shorter period of time, so the parents could be free from their liability sooner.

For example:

The purchase price $800,000
Your saved deposit $40,000
Your joint loan with parents $120,000
Bank loan only in your name $640,000

Understanding your options

What options are available to you will depend upon your own individual situation, which requires careful analysis by an adviser and always remains subject to the bank’s assessment and approval. Talk to us to discuss your options, whether you are providing or receiving financial assistance for the purchase of a property.

If you are a First Time Home Buyer and have any questions, contact our first home buyer specialist adviser who will help you.