First Home Loan: Things You Need To Know

First Home Loan

A first home loan is useful for those who want to buy a house for the first time and can afford to make regular payments. This loan is appropriate for homebuyers who find it hard to save for a large amount. First home loan NZ demands only a 5% deposit requirement than a traditional 15% to 20% deposit. If you qualify for the loan, then you can enjoy its benefits while buying your property.

However, there are a few things that will help you have a better understanding of this first home loan and that you can plan better. Let us have a look at it.

Things You Need To Know About First Home Loan


If you cannot decide what type of property to go with, it will be helpful if you get a pre-approval for a first home loan from a lender of your choice. It will make your search more manageable as you will know how much you can spend on it. The process is not complicated; you only have to meet the criteria. After it is approved, it remains valid for a month, and if within this time frame you can find your pick, then you can go for the final approval.

Consult Lender Before Building A New Home

Several lenders do not approve loans for building a home because of the risks involved. It would be wise to discuss your plans and intentions with a first home loan lender of your choice. They will evaluate your projects and get back to you, informing you whether the loan has been approved or declined. Doing so will save a lot of your time and money.

Government Monitors

Beware, the government keeps an eye on whether you live in the house you have bought with the loan. It makes it clear that you cannot put the whole property at rent or buy it as an investment. However, if you live in the property permanently, you can rent as much space as you want. The government and the first home loan lender ensure that you follow the agreement you had signed up for. 

Lender’s Mortgage Insurance (LMI) Premium

As per government rules, a first home loan borrower is entitled to pay an LMI premium, which is 1% of the loan account. It is done because there are added risks for the lender as you are borrowing up to 95% and in case you are unable to repay the first home loan. The government takes this premium as a counteractive measure for this probable failure to pay your debt. 


Knowing the facts mentioned above will help you decide how you can go about your first home loan process and the things you need to consider before that. Buying your first property is always unique, and going the right way can make things simpler and more comfortable. We hope we have been able to help you in having a fair understanding of the first home loan NZ and something that you should know before going for one.

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