The CoFund tool helps start conversations between Homebuyers and Contributors as they explore options and work out the right arrangement for them.
Homebuyers
You want to own your home but don’t have the deposit that most banks require.
BNZ requires Homebuyers to be:
18+ years old
a New Zealand resident or citizen.
The CoFund Legal Agreement that can be generated through the tool currently supports individuals or couples (not trusts or companies).
Contributors
You want to provide financial support to help a Homebuyer purchase their own home.
BNZ requires Contributors to be:
18+ years old
The Legal agreement that can be generated through the tool currently supports individuals, couples or family trusts.
A common scenario
A common situation is parent(s) wanting to help their child into a home by putting money towards a deposit. While you're happy to help, you want to make sure that your money is protected in case an unexpected event happens, like your child separating from their partner, or in case you need the money back to support you in retirement.
Why CoFund can be helpful
For some first homebuyers, saving enough money for a deposit can seem out of reach. The CoFund tool helps start conversations between Homebuyers and Contributors as they explore options to find the right arrangement for them.
“We had to choose
between having a kid
and buying a home.”
— Hannah, 31
Today, 80% of renters can’t afford to purchase a home. (Newshub)
Some people are financially able to help their loved ones purchase a home. But it can be a daunting task to understand what arrangement would work best and how to protect the funds now and in the future.
CoFund considers some of the common needs of Homebuyers and Contributors and asks them a few questions to help consider which arrangement can meet their needs The questions are designed to address the most common issues we found in our research, and provide explanations of what “bank terms” mean in everyday language.
When you get to the end of the tool you can print a summary of your responses. To speak with a Home Loan Specialist, you need to provide your contact details. For certain arrangements, they can then provide you with the CoFund Legal Agreement.
The CoFund Legal Agreement sets out the details of the arrangement between you and your loved ones. The agreement should be discussed with the parties’ lawyers. Home Loan Specialists can help support Homebuyers with their home loan application. All home loans are subject to BNZ’s lending criteria, terms and fees.
Different ways arrangements can work
Protecting family interests if circumstances change
Jane’s mum and dad want to gift money for Jane and her boyfriend’s first home. They want to keep the money within their family, so using the CoFund Legal Agreement generated through the tool, they can specify their contribution as a “loan”.
This means if Jane and her boyfriend later separate, the loan will be repaid to Jane’s mum and dad. They can then decide whether they want to gift the money to Jane to buy a new home.
Providing a home as security
Kelly has a good job and is managing to save a portion of her weekly wages towards a deposit on her first home. Her parents, John and Heather, think it will take several more years of saving. They think it would be better for Kelly if she was paying off a loan on a home of her own, rather than renting.
Using the CoFund tool and advice from their lawyer, the parents confirm their decision on being guarantors for Kelly’s home loan. As guarantors, John and Heather will provide their own home as security for Kelly’s home loan. This means their home may be sold if Kelly does not meet her loan repayments, and they will remain liable if there’s any shortfall.
A leg up from Mum and Dad
Nico and his brother Blake want to get into the property market. Their mum and dad want to help their sons buy a first home together although they will need the money back in the future. They use the free-to-create CoFund Legal Agreement generated through the tool and obtain independent legal advice to ensure their contribution is repaid when the boys sell the home. Nico and Blake may also need a property sharing agreement between them.
When the home is sold a few years later, the parents get their contribution back from the proceeds of the sale. Each brother takes their share of the increase in the house's value to use as a deposit on their own individual homes.
Help from a grandparent
Emma and Mike have been given some money towards their home deposit from Emma’s grandmother Carol, after she sought independent legal advice from her lawyer.
They use the free-to-create CoFund Legal Agreement generated through the tool to set out that Carol’s money will be paid back once Emma and Mike have enough equity in the home to borrow more money from the bank and repay Nana Carol in full.
Emma and Mike have a goal to be in this position within five years so that Carol has the money to go on a cruise for her 80th birthday.
