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The Difference in Deposits - Under 10%

One of the main barriers for Kiwi’s looking to buy their first home, is coming up with the deposit. The Reserve Bank has restrictions in place on banks that means they are restricted in how much they can lend to those without a 20% deposit, so what does it mean for you at different levels of deposit. Today we’re going to look at the options for those who have between 5% & 9.9% deposit.

So the minimum deposit requirement across the board is 5%, but there will likely be some strict criteria you need to meet, as generally the pathway for borrowing with a 5% deposit is through the First Home Loan Scheme at this point in time. Although banks do have the opportunity to lend to those with less than 10%, often, they will restrict their deposit requirement to 10% deposit outside of First Home Loan Scheme. The main criteria we need to meet under the First Home Loan, is the Income and House price caps, and coming up with the 5% deposit itself. So the income cap is that in the last 12 months you have earned less than $95,000 for an individual, or $150,000 as a couple if buying with a partner. House Price Caps vary across the country, but for Tauranga & Western Bay of Plenty the caps are $525,000 for an existing home, and $600,000 for a new build. There are further criteria to be met, including each lenders criteria. Under the First Home Loan, there is a fee of 1% of the loan amount, as a Lenders Mortgage Insurance to take into account. So there are options out there, there’s just a bit of box ticking to be done.