So you’ve decided to buy your first home - congratulations! Now that you’ve made the decision to pursue your dream of homeownership in New Zealand, you might be wondering where to get started. A factor that will play a big part in your home buying journey is getting together your deposit. Your deposit and your income will determine how much you can spend on a property and the size of a loan a lender can offer you. For this reason, it’s important to consider all the ways you can get the funds you need to secure your first home.
Here are our top tips for getting your home deposit together in 2020.
Establish how much you need
Depending on where in the country you’re looking to buy and the purchase price of your property, the amount you’ll need for a deposit will vary. In the past, it was common to require 20% of your property price to secure your mortgage, but with loan-to-value ratio (LVR) restrictions removed due to COVID-19, getting a loan can now be more achievable for first home buyers. While you’ll still need a deposit, if you’ve got a steady income, secure job and can prove to your bank that you are financially stable, you might find you’re able to get a loan without having a 20% deposit.
To figure out how much of a deposit you’ll need to save, take a look at average asking prices for homes in the area that you’re looking to buy.
Gather your deposit
Start by taking stock of what savings you already have - think about the personal savings you have in the bank, as well as savings like Kiwisaver, which you may be able to withdraw for your first home purchase providing you meet the requirements.
Buying with a partner or friends and family is a great way to pool together resources to get you into your first home quicker. It will mean that you’ll have multiple savings pools to draw from for the deposit, as well as lower mortgage repayments (as they’ll be split between more people) once you’ve secured your home.
You might also be lucky enough to have support in the form of a gift from family members.
Make the most of any assistance you can receive.
Now you’ve established what you already have and what you need, it’s time to bridge the gap. Depending on your situation, you could be eligible for assistance from the government to help you get into your first home sooner.
If you're a first-time homebuyer or a previous homeowner, and you've been making regular KiwiSaver contributions for 3 - 5 years, you may be eligible for a First Home Grant. This grant could give you up to $10,000 towards your deposit. The good news? If you’re buying with another person, they could also be eligible too.
You could also qualify for a special deposit amount for your first home loan. If you meet the income caps and regional house price caps, you could only need to have a 5% deposit for your property.