Despite high interest rates and the rising cost of living, many young Kiwis are seizing the opportunity to enter the property market. According to recent market data, first-home buyers accounted for 28% of property purchases in the last quarter, up from an average of 22% over the past year.
After a decade of being priced out, younger buyers are capitalising on lower property prices and greater market choice. With confidence in future income growth, now could be an excellent time to take the plunge into homeownership. Interest rates are likely at their peak, and market conditions offer several advantages for buyers.
Here’s how you can navigate the current market and take steps toward securing your first home.
Essential First Step: Saving for a Deposit
The size of your deposit is critical when purchasing your first home. Understanding how leverage works will help you set realistic expectations for what you can afford. Many first-home buyers may not have a 20% deposit, but that doesn’t mean you can’t get started. There are several options for those with lower deposits:
- Using Your KiwiSaver: If you’ve been contributing to KiwiSaver for at least three years, you may withdraw most of your savings (excluding the $1,000 kick-start) to use as a deposit for your first home. This can be a game-changer, especially when combined with your partner’s KiwiSaver funds.
- First Home Loan: Kāinga Ora’s First Home Loan is designed for buyers with a deposit as low as 5%. Eligibility criteria include income caps and regional house price limits, but this programme provides a valuable pathway for those who might otherwise struggle to save a larger deposit.
- Family Assistance: Many parents are supporting their children’s homeownership journey by leveraging equity in their own properties. While this can be a great option, there are important considerations for both parties. Our advisers can help you navigate this process to ensure it works for everyone involved.
Calculate Your Borrowing Capacity
Understanding how much you can borrow is a key part of the home-buying process. Use the Borrowing Capacity Calculator on our website to explore different loan amounts and repayment scenarios. This tool can help you:
- Set realistic property goals.
- Develop a savings plan.
- Gain clarity on what you can comfortably afford.
Loan-to-Value Ratio (LVR) Explained
Loan-to-Value Ratio (LVR) is the percentage of your loan compared to the property’s value. For example, if you’re purchasing a $600,000 home with a $120,000 deposit, your $480,000 loan results in an LVR of 80%.
In New Zealand, LVR restrictions significantly impact how much you can borrow. If your deposit is below 20%, lenders may have stricter requirements, but options like the Kāinga Ora First Home Loan can help bridge this gap.
Book a Free Consultation
Buying your first home can feel overwhelming, but you don’t have to navigate it alone. At Apex Advice, our experienced home loan advisers provide personalised support to:
- Simplify the pre-approval process.
- Negotiate better loan terms and interest rates.
- Offer insights into the latest market trends.
- Save you time by handling paperwork and lender communications.
Booking a free consultation with one of our advisers ensures you’re making informed decisions every step of the way. Let us help you turn your dream of homeownership into reality.
Take the First Step Today
The property market may be challenging, but with the right guidance, it’s possible to make your homeownership dreams come true. Reach out to Apex Advice today to start your journey with confidence.
