Getting Approved Finance For Your KiwiBuild Home
The momentum is starting to grow with KiwiBuild Homes and we are starting to hear about the KiwiBuild projects with new homes starting to become available.
We are seeing this Government talking of new KiwiBuild developments and how this is great for first home buyers that have been priced out of the market, especially in places like Auckland.
So lets look at what KiwiBuild homes are and how to finance them.
About KiwiBuild And The New Homes
The current Labour led government is promoting it’s programme to build 100,000 affordable homes and apartments over the next 10 years. They say on the Labour Party website that KiwiBuild will deliver 100,000 affordable houses over ten years specifically for first home buyers. They says that half of these will be built in Auckland which will increase in the number of affordable houses being built in Auckland each year from 500 to 5,000.
Stand-alone KiwiBuild homes in Auckland will be priced at $500,000-$600,000 with apartments and terraced houses under $500,000. Outside of Auckland prices are likely to range from $300,000-$500,000.
KiwiBuild homes are not going to be available to everyone and are being sold using a ballot process. They will only be sold to first home buyers and to avoid buyers selling the houses to reap windfall gains, a condition of sale will require them to hand back any capital gain if sold on within 5 years.
The projects that we are seeing released at this stage were already in progress before KiwiBuild was announced, and therefore it has only been a re-naming exercise at this stage. This week we saw the “new” KiwiBuild project in Mt Albert where there will be 18 new apartments at the Ockham Residential Tuatahi development which is a small number of the apartments being built there in an existing project.
But to most first home buyers it doesn’t matter where the new homes are coming from – as long as there are some that are affordable.
That brings us to how to finance a new KiwiBuild home.
Low Deposit KiwiBuild Mortgages Available
It is always a challenge for first home buyers to save a big enough deposit for the standard mortgages and this is especially the case in the larger cities like Auckland where the house prices are higher. Talk to most of the banks and they are saying deposit of 20% are required.
Even with access to your KiwiSaver and a HomeStart Grant it is still a huge amount to save.
When you are buying a new home you can access bank mortgages for a new build with just 10% deposit and sometimes even as low as a 5% deposit.
So what are the KiwiBuild Mortgages you hear about?
Some banks have started to announce “special mortgages” to help people into KiwiBuild homes. These KiwiBuild mortgages are basically the same as the standard new build mortgages but they have added a cash incentive to make them a little more attractive. They still have different criteria for these low deposit mortgages and different pricing as well.
Most banks will have some form of low equity fee or a low equity margin which means you will be paying more than you would if you had a larger 20% deposit.
If the bank charge a low equity fee then it’s a fee that you pay and once paid it’s not refunded; however a low equity margin is only paid until you can prove that you have the equity and can therefore negotiate a lower interest rate. If you have a fixed rate loan then you will need to wait until that loan comes off a fixed rate to get onto the lower rates. Some banks will scale the low equity margins depending on the size of your deposit (ie: from +.025% to +.075% over standard interest rates) whereas other banks have a flat margin and/or may apply the margin to the banks special interest rates.
The difference in what you might pay can be significant.
A good mortgage broker can help you choose from the different banks and get a low deposit home loan that best fits with your individual situation.
Please fee free to share this with anyone that might be considering going into a ballot for a KiwiBuild home, an AXIS Home, Affordable Home, any new build or anyone that may require a low deposit home loan.
Helping people get approved finance For your KiwiBuild home is what we do.