If you have less than 20% deposit and meet the Kainga Ora First Home Loan criteria then it’s a good option to go with, but you still need to decide which bank to go with.
It’s important to understand that not all banks offer the Kainga Ora First Home Loan too.
What Banks Offer The Kainga Ora First Home Loan
Firstly it is important to understand that banks are restricted with how much low deposit lending they can offer, and that is one reason that it is harder to get a home loan with less than 20% deposit – but there are some exclusions to the rules.
Banks are not restricted on new builds or via the Kainga Ora First Home Loan scheme.
But not all banks have signed up for the Kainga Ora First Home Loan scheme and that means a lot of first home buyers are not being offered this by those banks.
There are four banks that participate in the Kainga Ora First Home Loan scheme: The Co-Operative Bank, Kiwibank, SBS Bank and Westpac. There are also two non-bank lenders being NBS (Nelson Building Society) and Unity plus the Kainga Ora website lists NZHL which is affiliated to Kiwibank.
If you want to apply for a home loan using the Kainga Ora First Home Loan scheme then you need to go through one of the banks listed, and fit the eligibility criteria of that bank and of Kainga Ora.
The good news is for those that are approved they can get offered some pretty good deals.
What’s The Best Bank To Go With?
Our team at Mortgage Managers do a huge amount of home loans for first home buyers.
We also manage the Kiwi First Home Buyers Group on Facebook which is probably the largest forum for first home buyers in New Zealand. This gives us a good understanding of what first home buyers want and the questions that they ask.
For first home loans we have researched the options in detail and use this research to provide recommendations, and so when asked what is the best bank to go with we can summarise as follows:
- Who Offers the Lending – sometimes it’s not going to be a matter of which is the best option, it might be that one bank will approve the lending when others don’t.
- Who Offers the Best Deal – generally we would have to say that SBS Bank offers the best deal. They have the First Home Combo which offers a really good 1-year fixed rate and some cash contribution too, but probably the most important thing is they will offer the special rates when you refix your loans over the next few years even if you still don’t have 20% equity.
- Who Offers the Best Loans – if you are focused on paying your loans off faster then Westpac offers the best loans. You can use fixed loans to give the lower rates and certainty, but then can increase the repayments by up to 20% with no penalty and without automatically reducing the loan term. If you need to you can then reduce your repayments again and you can even redraw money from your loans if needed.
Selecting the bank and the loan structure should be the most important thing you do when you buy your first home.
Unfortunately a lot of people are not aware of the options, or just go to the bank and never have a good discussion or have this information shared with them. Obviously if you went into a bank like ANZ then they are not going to suggest SBS Bank or Westpac even if they know that one of those is going to be a better option for you.
Getting the right loan, the correct loan structure and knowing the importance of the mortgage repayments will all help you have a better experience.
The Real Value of a Mortgage Adviser
Some people will choose to go directly to the bank to arrange their home loan. They might be approved and think that they have done well, and may even think that the bank has looked after them well too.
Others will prefer to use a mortgage adviser like one of our team.
There are some big advantages in using a good mortgage adviser and there is no cost to you either.
Firstly an adviser can assess your situation and find the best lender to suit. We say the ‘best’ rather than just the bank that you happen to be using now, or the bank that might approve you the quickest. The ‘best’ should be what is going to work for you and save you money over the time that you have a mortgage, and hopefully by having the best lender you can pay your mortgage off sooner but also without the stress.
A good mortgage adviser will help ensure that you have the best home loan, and show you how to manage those loans both now and in the future as your circumstances change over time. The adviser is there to help you with refixing your home loans and to advice on the loan structure and any changes that you can make that will help you manage your finances better.
The adviser will work for you and is available for any sort of questions too – from the very simple to the more complex.
The real value of having a mortgage adviser should not be underestimated.
