Private service offers first-home buyers $10,000 in credits

A privately funded financial services company has launched its answer to the recently cancelled First Home Grant, offering first-home buyers $10,000 in credits, which can be redeemed for their first house deposit.

Founded by Auckland-based entrepreneur Derek Handley, the platform, called Aera, is designed for first homeowners to open investment accounts in the aim of saving towards a home deposit.

Unlocked through these savings products, which have targeted annualised returns of up to 7.15%, Aera’s Deposit Credits program gives New Zealand first-home buyers a $10,000 “head start” toward their first home deposit.

The move comes after the federal government decided to scrap the First Home Grants program to give way to social housing initiatives.

While many have commended the decision to reallocate funds towards social housing, others have maintained that the two issues (social housing and first home grant) are unrelated – both being required and both benefitting the community and economy.

“The government’s $10,000 first home grants made a massive difference to tens of thousands of New Zealanders, and many more would have been planning to use it in the coming years,” said Handley.

“We felt compelled to pick up the slack.”

How Aera’s head start works

First-home buyers can access Aera’s head-start credits by signing up to one of Aera’s savings products, unlocking $500 upon signing up to the new plan. Customers can then unlock credits over the course of their savings journey through hitting savings milestones and completing learning modules, up to the possible $10,000.

“We are rolling the full program out over the coming months and there are a lot of developments to come, but the ultimate goal is to support first-home buyers into their first house irrespective of how far they are into their savings journey,” said Handley.

“We want to go further than the government scheme, though, by providing savings products, education and motivation to give Kiwis the best chance at hitting their goal.”

The pilot scheme will be available to 5,000 first-home savers initially, representing a significant proportion of the yearly First Home Grant recipients.

However, unlike the government grants, which had regional price caps on new homes and incomes, Aera’s program welcomes all first-time home buyers, said co-founder James Abbott.

“We see the 5,000 accounts as just a starting point. The goal is more first-home buyers, regardless of your background,” he said. “Whoever you are, if you’re saving for a first home, we’ll make the journey shorter. Aera’s goal is short and simple, to be the fastest way to your first home.”  

The Aera credits will be redeemable in the form of cash toward their deposit, when savers use Aera services to insure, finance or buy their first home.

By consolidating disparate products such as tier-one lending, insurance, and new home purchases, Aera aims to reduce friction and costs to then pass these savings on to consumers.