Kiwi Saver opens doors
A house becomes more than just shelter with time. For children a home can be their whole world and a lot of the time, an entire playground where fond memories can be formed.
With the advent of Kiwi Saver thanks to the previous government, we are seeing many more young families being able to buy without other savings or very little savings. With changes made to the fund in 2009, allowance was made for the use of the fund towards a deposit for a first home. Kiwi Saver patrons do have to wait 3 years of being signed up to Kiwi saver first, but a grant of up to $5,000 per person is also available.
Home ownership is the aspiration for many young families and when in a new country it can mean the feeling of having an anchor. Becoming a home owner could seem like an unlikely dream for many people on a tight budget, especially at a time when bank criteria seem to be tougher.
Being a mortgage broker we have in the past few months successfully processed many applications for families with little savings apart from being enrolled in Kiwi Saver for more than 3 years.
An example of this was a recent couple who we met, who had no savings apart from their Kiwi Saver. For this couple saving in a standard bank account was always a bit difficult, in their community if the extended family was struggling then everyone had to help. Any cash in a bank account was effectively open for any other extended family members to borrow. As withdrawals are not usually allowed from a Kiwi Saver account, there was no pressure to use the funds. They signed up onto Kiwi Saver for this exact benefit, years ago. Apart from having their own home to grow up in, the kids of this couple can look forward to possibly having guarantors in the future to help them buy their own homes.
The current lending criteria at most banks require at least a 5% deposit, an average family with Kiwi Saver would have approx $15,000 saved after 3 years. With the first home subsidy generously provided by the government, the total deposit available for a first home deposit could be around $21,000. This would enable a family to buy a home for around $400,000 without any other savings in place. Find out more about home loans
