Tips and tricks for first home buyers

  • 22/05/2018
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Get some mates and get a mortgage. It can sometimes be a clever way to get on the property ladder. Photo credit: Supplied

Buying with friends

Sam Kerrigan and his best mate Tristan Oorschot have been friends since they were four years old, they bond over snowboarding, golf and a few beers at the rugby.

Sam never imagined that when he bought his first home with his girlfriend Grace, Tristan would be signing the mortgage papers too.

"We couldn't have done it without him," Grace says. "We trust him and he trusts us. We just decided – why not?"

In a booming housing market, more and more buyers are looking to friends and family to help them get on the property ladder.

In Auckland, ANZ Mobile Mortgage Manager Rachel Holding says more than half of her clients buying for the first time can't do it alone.

Teaming up at an astonishing 23 years old, Sam, Grace and Tristan designed a 3 bedroom turnkey house in Halswell, Christchurch, costing $449,000.

The mortgage repayments are $450 a week – a flatmate pays $105 – putting it on a par with renting.  

The trio were savvy about saving their $90,000 deposit – they lived at home paying cheaper board, used their KiwiSaver savings, and received two HomeStart grants totalling $20,000.

"People might look at you like you might be a bit tight not going out each weekend, but it pays off massively," Sam says. "Just looking at people who rent, you're like 'oh you're wasting your money really'."

But ANZ's Rachel Holding says buying with friends does have some risks. "What happens if someone wants to sell. How do you determine the value of the property?"

She says formalising the arrangement, including getting legal advice, is key if you are considering purchasing with friends.  

Help from parents

Rachel says that many first home buyers are finding their way into the market with the help of family who can help in various ways such as:

  • A gifted deposit – family must sign a letter to confirm that the gift is unconditional
  • A deed of debt – an amount repayable when the property is sold
  • A family loan
  • Using equity in the parents' property – as guarantors or co-buyers.

"Parents want to help their kids – but you might find you're helping your child, and their partner, and what happens if that relationship deteriorates?" Again formalising the arrangement and getting legal advice is key.

Using your Kiwisaver savings

The pressure was on 25-year-old Joshua Piahana to buy his first home. The New Zealand Army soldier was flatting when he found out his partner was pregnant.

"We wanted our own place to call home," he says.  A week before their daughter was born, his offer was accepted on a house in Manawatu.

Using his KiwiSaver savings, Defence Force superannuation, a HomeStart grant, personal savings and a gift from his partner's mother, Joshua had a $105,000 deposit. His advice to others is to put as much as you can into super schemes.

"I was contributing 11% from when I joined the Army 6 years ago. Because it was the first time I'd had a full time job I didn't really notice the extra going out. I'd never been paid before! That paid for half the house deposit."  

But despite the big deposit, securing a home loan still took time. "It wasn't as easy as I thought it would be just because of my income and also my situation with having two dependents."

In February the new family got the keys to a 3 bedroom, $350,000 home in Ashhurst, a small town near Palmerston North.

"That was so exciting. Getting into the house and seeing it completely empty and just knowing it's ours – it was pretty awesome."

ANZ's Rachel Holding says to use your KiwiSaver savings to buy your first home you must have been a KiwiSaver member for 3 years.

Talk to your bank about how much you can access and whether you're eligible for a Housing NZ HomeStart grant. For more information visit https://futurewise.anz.co.nz/benefitting-from-kiwisaver/first-home.aspx

Goals and compromises

Rachel says buyers need to understand that their first home may not be their perfect home. It may mean buying further from the city, or looking at townhouses or apartments.

Buying in a small town like Ashhurst meant Joshua and his partner could still find a quarter acre paradise, complete with a vegetable garden and fruit trees.  

"We love it – the privacy is a big factor," Joshua says. "We've got granny smith apples, pears, lemons and a grapevine."

"It's not our dream home, but it's pretty good."

In Christchurch, Sam, Grace and Tristan built their home with resale in mind, so they could go their separate ways.

"It's not like you have to live with friends forever," Grace says. "It's just for a couple of years, you can build up your equity in your home and then you can get something you really want."

Rachel says with the market losing its intensity, first home buyers have more chance of securing a home. Using KiwiSaver savings, buying with friends or family, and being prepared to compromise helps.

"Sit down with your bank and work out how far away you are," she says. "You may be a lot closer than you think."

This article has been created for ANZ. For help finding the right home loan solution for your needs, visit anz.co.nz/homeloancoach

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