That Home Loan Hub
Welcome to That Home Loan Hub, your ultimate guide to mastering the world of home loans and property. I'm Zebunisso Alimova, here to simplify the complexities of real estate and provide you with expert insights and the latest trends.
Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
First Home Buyers Alert: Kāinga Ora Premium Doubles from July 1st
Breaking news for Kiwi first home buyers! The Kāinga Ora low equity premium is more than doubling, jumping from 0.5% to 1.2% of your loan amount effective July 1st. This change significantly impacts anyone using the First Home Loan scheme with less than a 20% deposit.
Let's put this in real money terms: on a typical $600,000 mortgage, you're now looking at $7,200 instead of $3,000 – that's an extra $4,200 straight out of your pocket! And if you add this to your loan balance rather than paying upfront, you'll end up paying considerably more over a 30-year mortgage term. This fee increase only affects Kāinga Ora First Home Loans for buyers with less than 20% deposit, and only for applications submitted after July 1st.
Despite this increase, Kāinga Ora may still be your best pathway to homeownership, especially if you've only saved a 5% deposit. Many mainstream banks simply can't accommodate such low deposit lending in the current market. However, for others, this change might make alternative lenders or saving a larger deposit more attractive. Every situation is unique, which is why connecting with a mortgage advisor has never been more important – we can run the numbers across different scenarios and help you determine the most cost-effective approach. If you already have Kāinga Ora approval under the old premium rate, now's the time to act before that approval expires! Subscribe to our podcast and share this episode with your first-time buyer mates – this information could literally save them thousands of dollars.
Buy your first home in NZ Weekly Webinars
You thought it's not possible or the dream is too far away? Come to my webinar and I will show you, you are much closer to your dream, than you think you are!
Join Here - https://bit.ly/4m9SL72
Kayanga order increases low equity premium. What first home buyers need to know? Now, this one is very, very important. If you're a first home buyer in New Zealand, listening and understanding your options for what's to happen next tune in. So the fee just more than doubled, and here is what it means for your wallet. We are talking about a jump from 0.5% to 1.2%. Let me repeat this this is more than double. Let's get into what this means for you Now.
Speaker 1:If you're borrowing with less than 20% deposit under Kayanga Ora First Home Loan Scheme, this fee is basically an upfront fee you pay to compensate the lender for taking on more risk. The old rate was 0.50% of your loan amount, so it's calculated of your loan amount and the new rate from 1st of July will be 1.2% of your loan amount. So let's look at the numbers. What does it look like in dollars? Let's break it down. In the previous episode I talked about a couple that are looking to buy their first home loan under Kayanga Ora and they've got an average loan of $600,000. So the old fee they would pay 0.5, is $3,000. Now the new fee from 1st of July. If you haven't been approved by 1st of July, this is the new fee that you'll be paying. It'll be 7,200. So the difference is astronomical. It's 4,200 extra straight out of your pocket and usually it's either paid upfront or added onto your loan balance. And the worst thing is, if it is added onto your loan balance, you're looking at that $4,200 extra spread out across 30 years. So if you're not clever, if you don't have that upfront money to pay, you actually end up paying way more than that over the 30-year period.
Speaker 1:So why did they do that? Why did they change? Well, for now it was the budget review and I guess they were trying to find ways how to make more money. That's my take on it. But the kind of goal it says it reflects increased funding costs and the market risk. So what it means really is lending to low deposit buyers is more expensive for them and, for now, more expensive for you too.
Speaker 1:So who does this affect? It only affects first-home buyers using Kayanga or first-home loans. So if you are a first-home buyer but you went through a mainstream bank under their own funnel, that they have available, under their own funding, that they have available for first home buyers, you will not be affected by this premium. It's only for first home buyers using Kayanga Aura first home loans and also anyone that has less than 20% deposit. So you can still be a first home buyer with Kayanga Aura first home loans, but if you've got 20% deposit you don't have to pay that fee. It's only applicable to people that don't have 20% deposit and it's also applicable to applications submitted after 1st of July.
Speaker 1:So you'll be sitting there thinking is Kayanga Ora still a good option? It depends. For some buyers, yes, especially if you don't qualify with mainstream banks, because a lot of the deals that Kayanga Auto approves are sitting at 5% deposit. Not every bank in New Zealand can do 5% deposit deals at the moment. So if you only have 5% deposit and you really want to get into your home, paying that premium will not be the end of the world, but for others this might change to think about alternative lenders awaiting to save a larger deposit.
Speaker 1:So this is why talking to a mortgage advisor matters more than ever right now, because we can look at those options, we can do the numbers and we can let you know what you should be doing in your situation. So let's look at the real life example I've mentioned to you last week, the one that we've had, and they were quoted 0.5 rate, which was fantastic, but if their approval expired, they would have to now face a new fee of 1.2. So for this couple that got approved under the old scheme, it's more important than ever to go and buy a house right now. Otherwise, they will face to pay more than $3,000 in fees than they would otherwise. So here's the key takeaway If you're going through Kayanga Ora, double check your numbers, know the fees and get advice before you commit, and if you're feeling lost with all these changes, hit us up. That's what we're here for. So subscribe, share this with any first time buyer mates. This is the most important episode you would have listened to this month. Stay tuned.
