Changes to First Home Grant and First Home Loan – May 2023
This Insight is an update to our blog on “Getting on the Property Ladder – Changes to Kainga Ora First Home Grant” and “Budget 2022 – what does this mean as a first home buyer?”
The Government has announced changes to both the First Home Grant and First Home Loan schemes. These are to take effect from 15 May 2023 and 1 June 2023 respectively.
First Home Grant – Property Price
First Home Grant home price caps will be adjusted in 37 areas around the country.
In the Christchurch area, including Waimakariri District, Christchurch City and Selwyn District, the limit has been slightly increased from $550,000.00 to $575,000.00 for existing properties, and from $750,000.00 to $775,000.00 for brand new properties.
There is no change to the house price caps in the urban Auckland, Wellington or Dunedin areas.
The minimum new build house price cap for the First Home Grant will be lifted from $500,000.00 to $650,000.00, to reflect the rising cost of construction. This change will mainly impact smaller regional areas with relatively low property prices.
First Home Loan
With a First Home Loan, which are available through certain banks, you will only need a 5% deposit. As a condition of a First Home Loan, a fee known as an insurance premium is payable by the borrowers. From 1 June 2023, this fee will halve, from 1% of the value of the loan to 0.5%.
By way of an example, if you were to borrow $500,000.00 through a First Home Loan provider, currently there would be an insurance premium of 1% ($5,000.00) payable. This would mean you would have access to $495,000.00 towards your purchase. With these changes, with a $500,000.00 loan, the fee would reduce to $2,500.00, therefore giving you access to $497,500.00 towards your purchase.
We can help
For more information, or for help applying for the First Home Grant and/or the First Home Loans Deposit, please do not hesitate to contact our property and conveyancing team.
