We talk about the shared ownership scheme being an alternative way to help first home buyers get into their own homes. It's not always going to be the best option, but in some cases it may be the only viable option - and it's better than not buying at all.
When There Are Limited Options
Neil approached us in 2020 as he wanted to buy a home for his family. He had found a house in Taranaki for $330,000 but only had $21,000 for the deposit plus he had three defaults (paid) showing on his credit check.
He was definitely not in a situation to get a normal mortgage - there were not many options for low deposit bank mortgages and his credit issues put a stop to those anyway, and non-banks needed a minimum of 10% deposit.
The Cost With YouOwn
The real cost was $28,500 which was the difference in what they invested ($61,500) and what it cost to buy that share back ($90,000). Yes, there is an equity charge too but that is less than the interest rate that most lenders would charge and therefore we do not really consider that in these calculations.
At the same time the property had increased in value by $111,000 so even after deducting the cost of the shared ownership, Neil was $82,500 better off and that was at a time when New Zealand property values had not been increasing as much as they typically do.
The other way of looking at this is that Neil could have decided not to proceed and he would now have to pay $111,000 more for the same home!
What's Next?
Learn more about shared home ownership.
It's always a good idea to be well informed and that's where we can help.
We have created an e-book that you can download for free.
You can download it here.
You can also speak to an adviser who can look at your situation and help you decide if shared home ownership might be a good choice.
They are free and easy to speak with and will soon point you in the right direction for what you need to do to make sure that you can get as ready as possible, as soon as possible.
As mentioned when you're buying a first home it can be a real benefit to get into the market early, before prices increase.
You want to get pre-approved so that when you do go shopping for your new home you can move quite quickly when you see the one that is perfectly suited.
