The low down on Tiny Homes: Financing a tiny home project
As the cost of living continues to rise, more and more people are looking for ways to save money. One popular way to do this is by downsizing and living in a smaller home. Cabins and tiny houses are becoming increasingly popular for this reason.
While tiny homes are a lot easier way to get on the property ladder, you may still require some support with funding, and we know it's a bit of a cloudy area when it comes to knowing what funding you can and can't get on a tiny house project or transportable home project.
We've answered some FAQ's - so keep reading if you want the low down on financing a tiny home!
Financing Options for a Tiny Home
Can I use KiwiSaver to buy a tiny home?
You can use your Kiwisaver towards your tiny home or cabin project, but only to fund the land to build it on.
There are strict terms regarding using your Kiwisaver to purchase a home. If your tiny home is attached to a trailer, it will be considered a vehicle. You can’t draw down your Kiwisaver funds to purchase a vehicle.
However, you may be eligible to use your Kiwisaver towards your build if you can prove that your tiny home:
- Is a permanent, immovable dwelling
- Is fixed to solid foundations
- Meets relevant building codes
- Won’t become transportable in future
You could be eligible for Kainga Ora's First Home Grant -
Kāinga Ora offers a First Home Grant of up to $10,000 for eligible home buyers. You may qualify if you're a first-time home buyer or in some rare cases a previous homeowner and you've been contributing regularly to your KiwiSaver for 3–5 years. Check the Kāinga Ora website for eligibility requirements.
Use an existing home loan as leverage
If you’re lucky enough to already be on the property ladder, you can add to your existing home loan to fund your tiny home. As mortgage interest rates are significantly lower than other options, the loan will cost you less in the long term.
Find an alternative lender
Some New Zealand lenders offer finance especially for tiny homes, with lower interest rates and fast loan pre-approval.
If your tiny home is transportable, you may meet the criteria for a loan from Credit One. Credit One finances recreational vehicles such as RVs, caravans, motorhomes and trailer homes.
Take out a personal loan
A personal loan is a lot easier to come by than a mortgage.
Generally, the bank will only need to see a steady flow of income and a good credit history. Personal loan interest rates are significantly higher than mortgage interest rates, but the loan term is much shorter.