* Names in this case study have been changed for privacy reasons
Amit and Priya were very keen to buy their first home. They were looking at buying a two-bedroom house in Auckland, but with a deposit of just $50,000 and a combined income of less than $150,000, they weren’t sure if they’d qualify for a mortgage. That’s when they decided to get some expert advice from Global Finance.
The key to getting into your first home in New Zealand often lies in understanding the different mortgage options out there”.
Aseem Agarwal, Head of Mortgages at Global Finance
They got in touch with the team at Global Finance, who were able to help them secure their home through the Kainga Ora First-Home Loan scheme.
The initial challenge
Amit and Priya had been saving up for a while and because they had been contributing for over three years, they also had their KiwiSaver funds to draw on. However, they still didn’t have enough for the 10% or 20% deposit that most banks require.
The Kainga Ora first-home loan scheme
Global Finance team took a look at Amit and Priya’s financial situation and quickly saw they were eligible for the Kainga Ora First-Home Loan scheme. This scheme is designed for first-time home buyers and allows people to buy a home with a deposit as low as 5%.
To be eligible, Amit and Priya needed to meet a few criteria, including having a combined income of $150,000 or less, and working with the current employer for at least 1 year or working in the same industry or same job profile for 2 years continuously. Luckily, they ticked all the boxes, and with a bit of help from their parents, they were able to boost their deposit to $50,000, which was more than the required 5% of the $750,000 purchase price.
It’s worth noting that, since 2011, there’s been no tax on gifting in New Zealand, so their parents were able to gift them money without worrying about any tax implications.
The benefits of pre-approval
Once Amit and Priya were approved for the Kainga Ora scheme, they were able to get pre-approval from a bank.
This was a game-changer.
Pre-approval gave them the confidence to make an offer. The pre-approval also made their offer more attractive to sellers, as it showed they were serious buyers with their finance already sorted. In a competitive market like Auckland’s, having pre-approval can make all the difference in securing a property specially in a multi offer situation.
Out-manoeuvring other offers
With their pre-approval in place, Amit and Priya were able to make an offer on a property with few conditions and a short timeframe. They could get their valuation and building inspection done within a week, which made their offer a lot more appealing to the seller. Ultimately, they were able to outbid other potential buyers who might have had longer finance conditions.
Access to competitive interest rates
Through the Kainga Ora First-Home Loan scheme you can still get access to the same competitive interest rates as buyers with a 20% deposit. For Amit and Priya, this meant they could get a mortgage with the 4.99% two-year fixed rate that was on offer at the time. They were also eligible for a cash back offer of up to $5,000, which covered the costs of buying a home, like solicitor fees and building inspections.
The key lay in understanding the different mortgage options
Amit and Priya’s journey to home ownership is a testament to the importance of taking advantage of professional advice when considering mortgage options. With the guidance of Global Finance, Amit and Priya were able to leverage the Kainga Ora First-Home Loan scheme to buy their first home. Having bank pre-approval gave them confidence to make an offer and made their offer more attractive, ultimately allowing them to buy their home.
The right advice can make home ownership a reality
For first-time homebuyers in New Zealand, Amit and Priya’s story serves as a compelling example of how the right advice and mortgage strategy can turn the dream of home ownership into a reality. And that is precisely what the experts at Global Finance are good at: helping you secure the best available mortgages. So, if you are looking to buy your first home, get in touch with our mortgage brokers either by emailing info@globalfinance.co.nz or calling 09 255 5500
The information and articles published are true to the best of the Global Finance Services Ltd knowledge. Since the information provided in this blog is of general nature and is not intended to be personalized financial advice. We encourage you to seek Financial advice which is personalized depending on your needs, goals, and circumstances before making any financial decision. No person or persons who rely directly or indirectly upon information contained in this article may hold Global Financial Services Ltd or its employees liable.