Deals for new homebuyers
First-home strivers in many other areas of New Zealand have faced either only modest rises, no rises at all, or even falls.
WESTPAC describes saving for a first-home deposit as ‘‘hard and boring’’ in its advert for its HomeSaver pack. Depending on where you live, you might disagree with the adjectives.
The rate of rise of house prices in some suburbs in Auckland makes ‘‘endless and terrifying’’ more appropriate words for the emotions youngsters saving for their first home loan would feel.
Had they set their sights on a median home in Glen Eden, an outlying suburb in West Auckland, they’d have seen a 20 per cent deposit rise from $96,000 to $125,000 between the end of June 20014 and June 2015.
First-home strivers in many other areas of New Zealand have faced either only modest rises, no rises at all, or even falls.
But wherever they are, firsthome buyers need every bit of help they can get, which is why banks have developed packages of services and tools to help them qualify for the loans which make the banks’ shareholders their money.
Banks are also repositories of knowledge for aspiring homebuyers, and can help them access their KiwiSaver funds, and structure limited guarantees from parents to help kids into homes to help them squeak in without paying low equity fees or premiums.
The banks have all made it easier to compare their offerings online so first-home buyers can negotiate for better deals at their chosen bank.
WESTPAC
$40.8 billion of home loans at the end of March, with $8.1b in loans where the deposit was less than 20 per cent when the loan was made. The bank’s Homesaver package features three tempting parts: advice, a higher chance of being allowed a loan of more than 80 per cent of the value of the property, which are rationed thanks to Reserve Bank lending restrictions designed to cool house price inflation, and a $1000 ‘‘home booster’’ when they draw down on a home loan.
As with any borrower ‘‘conditional pre-approvals’’ for loans so people can go out shopping for a home are available, but there are ‘‘coaching tips’’ to help on people’s home-buying journey.
The package is based around the bank’s online bonus saver, which pays a base rate of 0.1 per cent plus 3.5 per cent (total of 3.6 per cent) if there are no withdrawals and at least one deposit each month.
Westpac’s standard one and twoyear fixed rate loans are 5.39 per cent, but those with deposits of less than 20 per cent pay more.
Westpac adds an additional interest margin of between 0.25 per cent and 1.5 per cent a year for those with deposits of less than 20 per cent, depending on how big the deposit is.
Buyers who do end up paying this margin should get their home revalued as prices rise. Once the equity is over 20 per cent, no margin should be charged.
Interest paid on a 90 per cent home loan on a $450,000 house (New Zealand median at end June) in the first two years of the loan would be $49,158, unless house prices rise so fast the low equity margin is extinguished quickly, and the interest resets to a lower rate.
ANZ
$55.8b of home loans, with $7.1b of low equity loans. A getting-to-know-you ‘‘review’’ to set the plan in action. It’s based around the ‘‘serious saver’’ account which has a base rate of 0.1 per cent and a bonus rate of 3.8 per cent if you make no withdrawals in a month and make a deposit of $20 or more, adding up to 3.9 per cent.
Like Westpac, there’s the chance to get a pre-approved home loan which ‘‘shows agents that you are serious about buying’’. You also get two free e-valuer reports, to give you an estimate of what the property you are considering may be worth.
The bank will waive its $500 loan application fee though many borrowers negotiate this away anyway. It also says borrowers ‘‘could’’ get a ‘‘cash contribution to help with buying costs’’.
ANZ’s standard one and two-year fixed rate loans are 5.1 per cent and 5.25 per cent respectively, but ANZ charges a one-off ‘‘low equity premium’’ (people often add this fee to the loan) of 0.25-2 per cent of the loan’s value for people with deposits of less than 20 per cent.
Interest paid in of $42,260.
BNZ
first two years $34.7b of home loans, with $3.4b of low equity loans. BNZ does not package up products into a single first-home-buyer package, but it offers the same advice, tools and pre-approvals as other banks. Its Total Money offset accounts is of interest.
A buyers’ parents can help keep interest costs down by depositing money in one of these.
They don’t get any interest on it, but while it’s in there, interest on their children’s home loan is calculated on the amount they borrowed minus the sum on deposit.
BNZ also has a credit card which charges interest at mortgage rates, and does Flybuys on home loans.
Its one and two-year fixed rate loans are both 5.09 per cent. Like Westpac, it charges a low equity interest rate margin. This is 0.35-1.15 per cent for loans of more than 80 per cent LVR
Interest paid in of $46,725.
ASB
$49.8b of home loans, with $8.5b of low equity loans. Like BNZ, it has no specific firsthome buyer package, but it offers the ‘‘Homebuyer’s journey’’ online guide, and is a repository of advice, tools, savings accounts and preapprovals for first-time homebuyers, just as all banks are.
Its one and two-year fixed rate loan rates are 5.05 and 5.25 per cent. Its low equity premium is 0.25-1 per cent depending on the deposit’s size.
Interest paid in of $42,260.
KIWIBANK
$14.8b of home loans, with $2b of low equity loans. The key plank of its first-homebuyer package is a ‘‘six-year price guarantee’’. Essentially, borrowers can claim the difference between what they paid, and what they could have paid with another bank after six years, if they can show the bank that their loan has cost more than it would have at a rival bank.
We’ll probably never know if any claims are ever made, but it shows how hard Kiwibank is trying to win first-home-buyer business.
Conditional pre-approval, and a ‘‘house warmer’’ contribution of $500 is offered. Its Notice Saver is the account it’s advertising to help to save a deposit, with rates of 3.3-3.75 per cent.
Kiwibank’s standard one and two-year fixed rate loans are 5.39 per cent and 5.49 per cent. Its low equity fee is 0.25-0.8 per cent depending on the size of the deposit.
Interest paid in of $44,108.
first two years
first two years
first two years