Kayanga Ora Fee Increase Explained

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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 .

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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

Breaking Down The Cost Impact

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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 .

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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 .

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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

Who's Affected and Future Options

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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 .

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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 4:02

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

Real-Life Example and Key Takeaways

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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 .