Paying for Gateway land

Interest payments on the land

3 percent of capitalised interest (meaning you don’t need to pay it back regularly) is calculated each year and added to your original Gateway balance.

An example:

• Gateway land cost of $120,000
• 3 percent of that amount ($3,600) added each year
• After 10 years, the balance of your Gateway would be 10 years x $3,600 + the original $120,000 = $156,000.

Interest on land is charged from year 6, but at reasonable amounts. This is to help you slowly progress into full home ownership.

These work as follows:

• Years 6 and 7 - 1 percent of $120,000 = $46 fortnightly
• Years 8 and 9 - 3 percent of $120,000 = $140 fortnightly
• Year 10 - 5 percent of $120,000 = $230 fortnightly

There is no interest charged on the interest added to the principle amount. This means interest is only charged to the original Gateway amount.

Read our case study of how Gateway assistance works and how interest is calculated.

After 10 years

After 10 years of living in your new home, you will need to buy the land. To do this talk to your bank about refinancing so you combine both your Gateway loan and home loan into one home loan (mortgage), with one set of mortgage repayments.

If you’re unable to refinance Gateway, you will need to consider if home ownership is right for you.

Construction and home loans

There may be some restrictions on your home loan available from the bank. You may not be able to borrow as much as you would normally. In most situations where you’re buying land to build on, your home loan will need to be a construction loan.

A construction loan means you draw down the loan amount gradually as the build progresses. You’ll start paying off the home loan while still living elsewhere, before you move in, so you’ll need to budget for this cost.

When purchasing a new house and Gateway land package (if the house is already built) you won’t require a construction loan. Instead you’ll take out a loan when the house is ready to move into, and start your repayments then. For example, see the house and land packages at Hobsonville Point.