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Helpful information for first home buyers

Historically, first home buyers have always been up against it. A housing shortage, low interest rates, immigration, heightened investor activity, they’ve all caused property prices to rise well above wage inflation and made it very difficult for FHBs to save a deposit.

According to REINZ’s Monthly Property Report for May 2021, nationally, the median house price had risen 19.1%, year-on-year, to $810,000.

In turn, rent prices are increasing, making it even more difficult to save up a decent deposit for a first home.

Canstar recognises there’s a great challenge for first home buyers. So, to provide aspiring home owners with more information, each year we assess and rate the major players in the home loans market to rate their products, service and value for money.

To read more about our latest awards, and to discover why ABS won our 2021 award for Bank of the Year | First Home Buyers click here.

Loan features you may want to consider include:

  • Additional repayments
  • Redraw/transactional home loan
  • Offset facility
  • Split facility
  • Top-up facility
  • Loan portability

Pre-purchase tips:

Don’t start looking until you have a location

There are thousands of places to buy out there and the possible choices can become overwhelming. Narrow your search to a specific location, before you start looking. Choose either one suburb, or one suburb and anything within a 5km radius of that area. Having a focus will save you precious time.

Suss out the market

Falling in love with a property on the very first weekend you start looking can give you a bad case of buyer’s remorse down the track. So, once you’ve chosen your location, put yourself in a good negotiating position by getting to know the value of the suburb you’re considering.

Get home loan pre-approval

It’s vital to know what your maximum budget is for buying a home. There’s no point looking at places out of your price range. It pays to talk to your financial institution or a mortgage broker about getting a loan pre-approval. You should also work out your upfront costs, such as lender’s mortgage insurance and moving costs.

Check your credit rating

Knowing what’s on your credit rating can help you to explain any transgressions to your prospective lender. You can check your credit rating at Centrix, Credit Simple and Equifax NZ.

Compare home loans

Your home loan may be the biggest debt you ever have, so you should ensure you are not paying more than you need to. Compare home loans on Canstar’s database.

Finally, once you have found the home of your dreams, make sure that any documentation you sign is conditional on at least a property inspection, as well as finance.

How can KiwiSaver help first home buyers?

KiwiSaver is the retirement savings scheme in New Zealand.

In the KiwiSaver Scheme, members build up their savings through regular contributions from their before-tax pay, from their employer, and from the government. It is voluntary to join.

KiwiSaver does not replace New Zealand Superannuation (NZ Super), so you can receive super payments and have a KiwiSaver fund at the same time. NZ Super is the government’s pension scheme available to most New Zealand residents over 65 years old. It is not means tested.

KiwiSaver can also come in handy before you retire. You can access your savings when you buy your first home, if you have been contributing for three years or more.

Canstar puts in the hard yards here, too, by comparing KiwiSaver providers, to help give you some guidance.

You can read our full guide to KiwiSaver, and learn everything you need to know about making the right investment choices by clicking here.

When you’re a first-time home buyer, navigating the home loan process can be quite overwhelming. Obviously, any first home buyer grants and incentives are welcome if it means securing the home of your dreams faster.

Current buyer grants and incentives, include:

  • From banks, including Kiwibank’s First Home Saver and cash from lenders including ASB and SBS Bank
  • First Home Loan is a special home loan for first home buyers, which only requires a 5% deposit. First Home Loans are underwritten by Housing New Zealand and issued by several lenders. These include: Westpac, TSB, Kiwibank, The Co-Operative Bank, and SBS Bank
  • KiwiSaver First Home Grant. This provides first-home buyers with up to $5000 for individuals, and up to $10,000 where there are two or more eligible buyers, to put towards buying an existing property. First home buyers who intend to buy a brand new property or land to build on can apply for a First Home Grant of up to $10,000 for individuals, and up to $20,000 for two or more
  • Housing associations such as the New Zealand Housing Foundation allow you to buy part of a house but live in the whole dwelling. Similar to owning the house outright, the deal is rent-free

For more details on them all, check out our story: What First Home Buyer Grants and Incentives are on Offer?

Canstar compares the following home loan providers for first home buyers:

  1. ANZ
  2. ASB
  3. BNZ
  4. Kiwibank
  5. SBS Bank
  6. Sovereign
  7. The Co-operative Bank
  8. TSB
  9. Westpac

Recent Award Winner

First Home Buyers Award