PHOTO: The Kāinga Ora First Home Loan scheme just got more expensive. FILE
🎯 Thinking of using a Kāinga Ora First Home Loan? From July 1, it’ll cost you a whole lot more upfront.
💸 What’s Changing?
From 1 July 2025, the Kāinga Ora First Home Loan scheme will become more expensive for first-home buyers. The Lenders Mortgage Insurance (LMI) fee is increasing from 0.5% to 1.2% of the loan amount.
That’s more than double — and for an average loan of $550,000, it means your cost jumps from $2,750 to $6,600.
🧮 That’s $3,850 added to your loan, or an upfront fee you’ll need to factor in.
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🏦 Why the Increase?
The Ministry of Housing and Urban Development (HUD) confirmed that the government will stop subsidising the mortgage insurance premium as part of Budget 2025.
“This change is expected to save $17.9 million per year from 2025/26. These funds will be reinvested into social, transitional, and supported housing,” HUD stated.
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🔍 What It Means for Borrowers
📈 Who’s eligible for the loan?
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Individuals earning under $95,000
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Couples or single parents earning under $150,000
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5% deposit required
🏷️ Key perks of the scheme still apply:
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Access to bank special rates
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Avoidance of standard low-equity fees
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No need for 20% deposit
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Often higher bank cashback offers
📣 What Mortgage Advisers Are Saying
💬 David Cunningham, CEO of Squirrel:
“Yes, the fee hike is noticeable, but with interest rates down 1.5% compared to last year and prices softer, first-home buyers are still better off overall.”
💬 Jeremy Andrews, Key Mortgages:
“It was a surprise. But the First Home Loan still makes sense for many — especially with boarder income options, faster preapproval, and better cashbacks.”
💬 Karen Tatterson, Loan Market:
“Without this scheme, many buyers can’t get preapprovals from main banks. That limits their ability to shop with confidence.”
🧠 What You Should Do
✅ Get advice from a trusted mortgage broker
✅ Understand your total loan cost, not just the deposit
✅ Compare all options, including cashback, interest rate, and long-term equity goals
🏁 The Bottom Line
The Kāinga Ora First Home Loan scheme just got more expensive — but for many first-home buyers, it still provides access to homeownership when other paths are blocked. With changes looming, getting preapproval before July 1 could save thousands.
SOURCE: RNZ