Sharechat Logo

Government to help more people buy homes

By Jenny Ruth

Thursday 19th May 2005

Text too small?
 Jenny Ruth

In his 2005 Budget speech, Finance Minister Michael Cullen said the government will also launch a home ownership education program and will link its new "KiwiSaver" retirement savings program to assisting home ownership.

Under the KiwiSaver scheme, the government will offer people a deposit subsidy of $1,000 for each year of membership of the scheme up to a maximum of $5,000 which can be accessed to pay a deposit on a house from the third year of saving.

The government will also contribute an upfront payment of $1,000 to everyone who take up the voluntary KiwiSaver scheme. The KiwiSaver program will start from April 1, 2010. Unless used for a house, the money saved cannot be accessed until retirement or until after five years, whichever is the greater.

Up to 3,000 households a year are expected to take up this offer which is estimated to cost up to $35 million a year. Currently, fewer than 1,000 people a year are accessing the scheme.

Income and purchase price caps will apply but have yet to be finalised. House price caps will reflect regional price variations.

The subsidy will be in the form of a suspensory loan, rather than an unconditional grant, and will have to be repaid if the recipients stop living in the house within a reasonable period.

Housing minister Steve Maharey says the mortgage insurance scheme is expected to help 5,000 to 8,000 first home buyers a year. "It does not exclude low income households, but is aimed primarily at those earning above $40,000 a year, as borrowers must be able to service a mortgage," Maharey says.

Applicants will still need a good credit history, canít already own a home, and intend to live in the house.

Housing New Zealand Corporation insures against bad debts by charging a premium of 3% of the loan, 1% paid by the borrower and 2% by the government. The government has also raised the income limit to qualify for the scheme from $65,000 to $85,000 a year for a household with one or two borrowers and from $100,000 to $120,000 for households with three or more borrowers.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Genesis Power cranks out bumper profit
US visitor numbers leap 38% in January
Tourism ratings get megabuck boost
Business watchdog ready for busy year
Minimal debt impact from airline recap
Export prices weather uncertainty
Figures show tourism was booming
Court clears path for Commerce Commission
Close watch on hydro lakes
State-owned powercos not for sale