We can assist you with purchasing your first home, second home or building a new home.

The Nimbus Project mortgage advisers can assist you in taking control of your mortgage and assisting you in not just getting on the housing ladder but also getting out of debt.

Buying a home for the first time may be an intimidating and nerve-wracking experience. There’s a lot to understand, too much jargon as well as a lot of preparations to do and potential dangers to avoid.

This article will help you as a first-time house buyer in New Zealand.

Buying your first home can be fun, but it is important to ask the right questions and do your research before you go ahead with any purchase.

A key question is how much can you buy for? Your deposit + mortgage = your maximum purchase price.

Your deposit could be made up of your KiwiSaver, the Government “First Home Grant”, savings, gifted funds, plus more.

How much you can borrow depends on a few different factors, your best to get advice early and get an indication of your borrowing power so you can have realistic expectations.

You may be able to withdraw money from your KiwiSaver account to use as a deposit on your first house if you’ve been a member for at least three years. You may be eligible even if you have previously bought a house but are currently in the same financial situation as a first-time buyer and haven’t used your KiwiSaver for a home purchase before.

You can withdraw any contributions you’ve made, as well as interest and tax credits, if you’re eligible, but you’ll need to keep a minimum balance in your KiwiSaver account of $1000.

You may be eligible for a KiwiSaver First Home Grant of up to $5,000 ($10,000 for a new build) if you’ve been a member of KiwiSaver for at least three years and have been contributing consistently during that time, how much you can get depends on how long you’ve been contributing.

To be eligible for a First Home Grant, you must meet some of the same requirements as for a First Home Loan.

• You must intend to live in the house.
• You do not own any other property.
• Your annual income must be less than $95,000, or $150,000 if it is a joint purchase.
• The property’s price must be less than the region’s value cap.

Banks Ideally want you to have a 20% deposit, but that can represent a huge amount of money and a huge barrier. With a 20% deposit a:

• $400,000 purchase would be an $80,000 deposit
• $600,000 purchase would be a $120,000 deposit

10% Deposit

Banks have limited ability to approve mortgages with a 10% deposit. With a 10% deposit a:

• $400,000 purchase would be a $40,000 deposit
• $600,000 purchase would be a $60,000 deposit

5% Deposit

Kainga Ora (previously called House New Zealand) in conjunction with some banks offer a govt guaranteed loan where you only need a 5% deposit. With a 5% deposit a:

• $400,000 purchase would be a $20,000 deposit
• $600,000 purchase would be a $30,000 deposit

There is extra rules and requirements to qualify for the 5% deposit loans, your advisor can walk you through this and the application to the bank and application to Kainga Ora.

To learn more about your options on 10% and 5% deposits, schedule a free consultation or contact us via email or phone.

There are a few options to consider when looking at building a home:

Turn-Key

You typically pay a 10% down payment at the outset of the build contract and then pay the rest of the funds when the house is fully complete and ready to move in. The developer manages the entire project in full.

Progress build loan

For this approach you would typically buy a piece of land and then pay the building company at key points during the build project. Think of it as pay as you build.

You would ideally have a fixed price contract with the builder. This means no (or minimal) extra costs throughout the build. The bank prefers you have a fixed price build contract especially if you have a smaller deposit.

Finding the right piece of land and the right build contract (at the right prices) are key.

Self-managed

You are responsible for project managing the whole building process yourself. This form of contract is only best for those experienced in construction and is not recommended for a first home builder.

A mortgage refinance is the process of moving your mortgage from one lender to another. There are a few reasons why people may do this; to get a better interest rate, better online banking, better service, their current bank won’t allow them to borrow additional funds, purchase of an investment property and so on.

Its typically easier and quicker to refinance then the process when you initially bought the home. There will be some costs, but we always seek a cash contribution from the new bank to offset those costs and potentially some cash left over that you can keep.

If you’re wanting to weigh up your options and see if your bank is still the best fit, get in touch and we can help.

Owning a home is great, but the next step is repaying the mortgage & there is lots of strategies to speed it up, here are a few:

1. Increase the size of your regular repayments.
2. Make sure to plan your mortgage in a way that allows you to be flexible.
3. Make additional one-off payments.
4. Leverage your savings to reduce your interest costs (while retaining access to your savings)
5. If your interest rate falls, don’t cut your payments to match.
6. Leverage investment property to repay your home mortgage faster.

When your existing fixed interest rate period expires, refixing is the act of locking in a new interest rate for a set amount of time.

This is good opportunity to change payment amounts, make any planned lump sum repayments and lock in some certainty by locking in an interest rate and locking in your regular repayments for between 6 months and 5 years.

Leverage refers to the use of borrowed funds to purchase a property. When you leverage a property, you borrow funds from a lender to acquire an investment property rather than paying the whole purchase price yourself. One of the reasons investing in property is so appealing is the ability to leverage your investment. In some cases, you can leverage existing property you own so you can buy the next property without putting in any cash at all.

Two motivations to employ leverage are:

• Simply put, you don’t have enough money to buy the investment property you want.
• You aim to optimize your profits by investing less money in each property.

When you own a rental property, there are two types of potential returns:

• Rent – this is typically used to help cover the costs of the property (e.g., mortgage, rates, insurance, maintenance)
• Capital gain – this is the property increasing in value over time. You don’t realise this gain until you sell the property.

You should evaluate the cash return when considering a leveraged investment. The cash return is the difference between the cash you receive from the investment property (rent) and the expenses of the property, including but not limited to rates, mortgage repayments, insurance, maintenance, property management fees.
Depending on the size of the mortgage and expenses you may need to be putting cash into your investment property on a regular basis, as the rent may not cover all expenses. You need to be aware of this so you can plan your cash flow and budget accordingly.

In this case you would have an expectation to be making money on your investment through the capital gain (the property going up in value) and making a rental gain once you had repaid the mortgage.

Mortgage is a long term commitment that many people in New Zealand go through. We are experienced financial advisors who operate in a professional and timely manner to serve our valued clients.

Interested in working with The Nimbus Project? To obtain the best Mortgage advice, send us an email or make an appointment with one of our experts.