Our First Home Accelerator helps Kiwis to buy a home for the first time. We know how hard it is now for many in New Zealand - even those with a strong income - to build a deposit to purchase their first family home. So we’ve created a step-by-step service that lets you live in the home you will eventually own, while accelerating your ability to build a deposit that supports you along your journey to home ownership.
The First Home Accelerator has six steps:
We believe the current banking system is failing Kiwis who deserve the ability to own a home. So we’ve designed the First Home Accelerator to provide fresh, fair homeownership opportunities in New Zealand.
Take a look at the pros and cons of each option below and decide for yourself:
Despite downturns, median house prices double in Auckland roughly every ten years in the long run. Saving a deposit for a $700,000 house that will require $140,000 today might need $260,000 in ten years. Just 2.5% of the property purchase price gets you started on the journey to owning your first home today.
In almost any situation, given historical performance of house prices, absolutely. If you were saving $2,000 a month from a starting balance of $0, it would take 10 times longer to save for a traditional 20% deposit on the same $700,000 house than if using the First Home Accelerator*. This means you will move into your home in 1 year instead of 10 years.
*Assumption: median house price grows at historical 30 year average.
Over last thirty years the median house price in Auckland has risen almost 7.5% per year.*
However, with our First Home Accelerator, the agreed price for you to buy your home outright in the future will rise significantly below that historical growth rate. The exact rate your agreed price will rise will be determined through our application process but as it is capped, the market will never run away from you.
Even though prices are not rising today, decades of history suggests the value of your home may grow higher than your agreed price over the term of your agreement with Aera. If that happens, you get to keep all of the upside.
So instead of the market punishing you if it runs away, our First Home Accelerator will reward you.
*Source: https://www.opespartners.co.nz/property-markets/auckland
Your deposit credit is a deduction from the agreed price applicable when you decide to buy the home outright. You can use it like a deposit for when you get a traditional mortgage to buy the home outright.
We need to decide that together. Your eligibility centres around two things: the ability to make monthly payments and put down the initial 2.5% amount.
For example, 2.5% of an $700,000 home is $17,500. Monthly payments for this home would start at around $4000 a month. This payment would cover your rent, as well as building up your deposit credit. You’ll need to meet standard eligibility requirements, such as a responsible financial history, credit score and a strong commitment to buying your first home.
The monthly payment is always 7% of the agreed price of the property at the time.
This roughly covers how much you’d need to save for your deposit and pay market-equivalent rent. But with the First Home Accelerator, you’re living in - and enjoying - your future first home instead of paying rent to someone else.
For example, the monthly payments of 7% of a $700,000 house per year is approximately $4000 a month. This might be roughly the same as what you might already be paying in rent while saving for a deposit.
Yes, but you’ll know what they will be, and when they will change - no surprises!
Monthly payments rise annually in line with the agreed price growth of your future home. Our First Home Accelerator gives you a full payment schedule so you know exactly what you’ll be putting towards your home years in advance.
You can buy your home outright once you’re in the position to unlock your Purchase Option, which is usually between years 3 to 8 of the First Home Accelerator.
For the first few years, you’ll steadily build up your deposit credit. Once you’ve built up enough equity when combined with other assets such as your Aera Accelerated Savings and KiwiSaver balances, you should be eligible for a standard mortgage using a 15-20% deposit.
Once you’ve built up enough deposit credit combined with any other savings or assets you have (such as your KiwiSaver) to get traditional home finance, you can unlock your Purchase Option. You might be ‘mortgage ready’ with a 15-20% deposit level. Depending on market conditions and your income, you could be able to achieve this much earlier, as 10% deposits are sometimes acceptable with various lenders.
No, we do not offer mortgages right now. When the time comes for you to unlock your Purchase Option, Aera helps you to seamlessly achieve the next step with our finance partners. Our job is to get you in the best shape possible to reach that stage.
The deposit credit is not like a bank deposit or cash owed to you, so you can’t request it back. This is because the deposit credit has no value other than as a deduction from the price you’ve agreed to buy your home at. So your deposit credit builds up value, but it’s not something that can be withdrawn as cash.
Committing to the First Home Accelerator for three years is crucial. We’ve developed this service for Kiwis who are 100% committed to owning their first home, but are finding it impossible to make it happen in the current banking system.
So you can't pull out in the first three years without forfeiting your deposit credit. This is just like you can’t pull out of a mortgage if you change your mind.
No problem. You can walk away from the agreement with no fees or penalties. Plus, unlike a mortgage, you won't owe anything to anybody. However, if your deposit credit doesn’t have any value, you will in most cases forfeit it. We will work hard with you to explore all available options. As a last resort, we will help you try and sell your deposit credit to another aspiring homeowner.
If the house has declined in value compared to your agreed price, you may lose some money and it may be harder for you to get to the point where you can unlock your Purchase Option to buy your home outright. The flip side is also true, if the market grows at its historical average, you will be able to purchase the house outright much faster because of the benefits of the capital gains you have experienced from day one.
If the house has declined in value compared to your agreed price, you may lose some money and it may be harder for you to get to the point where you can unlock your Purchase Option to buy your home outright. The flip side is also true, if the market grows at its historical average, you will be able to purchase the house outright much faster because of the benefits of the capital gains you have experienced from day one.
Like any investment in property, there are risks as the market may go up as well as down. The market has gone down for very short periods, only a few times over the last 40 years. However, it does happen, and it happened in 2022. With the First Home Accelerator, there are many risks you are not taking on that you would be if you entered into a traditional mortgage such as being liable for a 30-year mortgage or being in a ‘negative equity’ position (whereby you owe the bank more than your house is worth which some people find themselves in today.
You also do not risk foreclosure where the bank sells the house from under you because you can’t make your payments. With the First Home Accelerator you will never be liable for more than you put in, and after the first 3 years you can walk away at any time. If you stick with the Accelerator for the long term, based on historical performance over many decades, the market value should outpace the agreed price you have the rights to buy your home for.
The First Home Accelerator is a service for people with strong incomes who still find building the deposit for their first home a significant challenge. So in this situation, you could exercise your right to buy and immediately sell it on the open market and you would receive the capital gains. This is not really what our service is intended for.
However there are situations where we can help you, such as if you are needing to move to another country and therefore no longer want to own or live in the home.
You need to have at least a 2.5% Deposit Starter and be able to make the monthly payments.
Out of your 2.5%, 1% immediately goes towards kicking off your journey of home ownership. This is your starting deposit credit balance. The rest will cover establishment costs and all that’s involved in purchasing the home for you to move into. This compares to needing 20% of the home to even consider buying today.
We understand that life can be unpredictable. We will work with you to figure out your personal situation and if you are experiencing hardship or unexpected personal circumstances, to explore alternative ways forward. Options include temporarily reducing the deposit credit portion of your monthly payments.
In the case of a major life disruption, we may offer you a payment break from deposit credit contributions if you are in serious need. You will still need to meet the rent portion of your payments. However, any missed payments are a lost opportunity for you to continue to build your deposit credit.
There is no interest rate as there is no loan in place while you are in the First Home Accelerator. You just make monthly payments that cover both your rent and build deposit credit in your home for when you ultimately buy it outright.
Yes, we are here to help families get into their first home.
Yes. If you are happy to have a flatmate, then that could be helpful to your cash flow and payments.
Yes. We want you to treat this like your own home, so pets are welcome.
Minor alterations are fine, but anything major could be complicated until you buy the home outright. We’ll be open and flexible, but our preference is that all spare funds you have are growing in your Aera savings account. That will help build your overall position to the point where you can buy the home 100%, faster.
We do! Until you unlock your Purchase Option we technically remain the landlord of the property. During that time we are responsible for all the things landlords are generally responsible for including rates and insurance.
You do. You are living in the home on a pathway to own it, but because you’re living in it you will pay all the things normal tenants pay such as your power bill, internet etc.
No. This service is uniquely designed for those who want to live in and work towards buying their first family home.
You can not use your KiwiSaver for the initial 2.5%. However, when you have built up enough deposit credit and want to trigger the full Purchase Option to buy the home outright, you definitely can use your KiwiSaver as a contribution to the purchase price, as long as you meet the first-home-buyer KiwiSaver requirements as outlined here at the IRD website.
If you’ve been contributing to your KiwiSaver for at least 3 years you may be eligible for a First Home Grant of up to $10,000 to top up whatever you are contributing towards the outright purchase of the home. This will only be available to you when you trigger your Purchase Option.
We make money through a combination of rental income, a portion of your monthly fees, as well as sharing part of the increase in the home value over the years leading up to when you buy the property outright.
