Alternative ways to buy your first home

Let’s be honest. Buying a home is a big commitment. With the market constantly changing, interest rates, and national price inflation, for a lot of people, the cost can seem unachievable.
Luckily, there are options out there that can help bridge the gap if your deposit, KiwiSaver, and home loan aren’t enough on their own. There are some alternative ways to get into your first home and on the property ladder - and we’re going to tell you all about them.

1. Kāinga Ora First Home Partner Scheme (KO)

The Kāinga Ora First Home Partner Scheme is a government-led shared ownership scheme that helps aspiring first home buyers whose deposit and home loan aren’t quite enough to buy a home that meets their needs.
How it works
Shared ownership means you initially share ownership of the home with a third party who purchases the home with you (in this case, KO). You are the majority homeowner and occupier, but KO will own a share in the home that you’ll buy out over time. It’s determined by several factors and is assessed on a case-by-case basis, including your deposit amount, how much your bank is willing to lend, and the contribution amount KO will make.
For example, you may have saved 10% of a home’s purchase price, but your bank is only willing to lend you 75%. Kāinga Ora then contributes 15% to purchase the home with you in return for a 15% share of ownership. The maximum contribution Kāinga Ora will make towards a home purchase is 25% or $200,000 – whichever is lower.
Visit the Kāinga Ora website to get in touch with them for more information.

2. Squirrel Launchpad

Squirrel is both a broker and a lender. They can help you onto the property ladder with as little as a 5% deposit. Squirrel Launchpad can help if you’re earning a good income but don’t have enough for a home deposit. This can be a good option if your income is too high for the Kāinga Ora scheme due to income caps.
How it works
To be able to apply for a loan with Squirrel, you have to be a first home buyer and be intending to live on the property. You’ll also need at least a 5% saved deposit (this includes KiwiSaver), have been on PAYE or a self-employed contractor for at least a year, and be buying in a metro location.
The loan is set up into two parts to help you pay it off faster. There’s the base loan, which is the main chunk that's on either a floating or fixed-term interest rate. The base loan is paid off over 30 years. Then there's the smaller equity loan, which is a five-year term. You can make extra payments on this loan whenever you like at no extra cost.

3. You Own

YouOwn is another organization that offers co-ownership, similar to Kāinga Ora. YouOwn mainly focuses on first home buyers; however, they do offer co-ownership to anyone who’s interested. They’re a privately funded organization, so there’s no income cap or eligibility criteria specified.
How it works
This is another shared ownership scheme, meaning you share ownership of the home with a third party. YouOwn will own a share in the home that you can either pay off over time, or if you choose to sell the house, they’ll take their share from the sale.
There are a few requirements you'll need to meet to be able to apply. You need to be a NZ Citizen or Permanent Resident, have a 5% savings deposit, have less than $15k debt, and have a household income above your location's median. You generally need a household income of more than $110,000 to borrow enough with a 5% deposit.
Contact YouOwn and they’ll put you in touch with one of their financial partners.

Taking the Next Step

It’s a breath of fresh air knowing that there are options for first home buyers who are struggling to save for a house deposit. Now your goal of getting on the property ladder is more achievable with companies that are committed to getting Kiwis into their first homes.
Did you find this helpful? Here at SM Property, we’re passionate about helping Kiwis achieve their property goals. Make sure to check out our previous blogs for more tips for first home buyers!
Feel like you're ready to take the next step? Get in touch with us today and we’ll help you find the perfect home for you. You can also visit our Instagram for more tips and tricks on home buying.

Glossary

• KO - Kāinga Ora
• Metro location - A region consisting of a densely populated urban agglomeration. Its surrounding territories share industries, commercial areas, transport networks, infrastructures, and housing.
• Household income - The total amount of money earned by every member of a single household, for example, you and a partner.
• Privately funded organization - An organization not funded by the government.
• Floating interest rate - A rate that changes periodically, depending on the market.
• Fixed-term interest rate - A rate where you pay the same amount each week, fortnight, or month. It stays the same for the whole length of the term you agreed to.