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Getting into home ownership is something nearly every Kiwi aspires to do. But it can be really daunting, and that’s something we’ve been helping people with for nearly 20 years.

Building your deposit up to a meaningful level is often the hard part. Here are some options that might help. And no, you don’t necessarily need to have saved 20%. Read on!

1. KiwiSaver First Home Withdrawal

These days, KiwiSaver makes up at least half the deposits of most first-time home buyers. Given that KiwiSaver is over 10 years old, it means people have had time to accumulate a deposit without even thinking about it too hard, so it’s no wonder KiwiSaver is so important to first-time buyers.

The eligibility criteria are simple:

  • You have been contributing for three years (strictly speaking, it’s 36 months, and they do not have to be consecutive).
  • You will live in the house and are a New Zealand resident or citizen over the age of 18.
  • You can withdraw all but $1,000 of the available balance.
  • You have not previously owned a property (there are some limited exceptions to this).

2. First Home Grant

    This can be a nice bonus and the same rules as above apply. The Grant pays $1,000 for every year you have been contributing to KiwiSaver up to $5,000. Remember you must have been into KiwiSaver for at least three years, so if you’re eligible, then you’ll receive somewhere between $3,000 and $5,000.

    If you are buying a brand-new property, then the Grant doubles. If there are two of you buying together and both are eligible, then things can really mount up!

    However, there are income caps to consider here. An individual buyer needs to earn less than $95,000, whereas a couple need to earn less than $150,000.

    And there are property price caps to adhere to as well. Unfortunately, the income and property price cap means the Grant doesn’t always work for folk who want to buy in Auckland.

    3. First Home Loan

    This loan is distributed via a handful of lenders (Westpac and Kiwibank being the main ones), and it allows people to borrow with as little as a 5% deposit.

    It’s useful for people who are struggling to scrape together a chunky deposit, but it comes with the same income limits as the First Home Grant. However, the price caps do not apply.

    4. Bank of Mum and Dad

    Hands up if you thought having parents ‘go guarantor’ would allow you to borrow more?

    I’m afraid to say that that’s not normally the case.

    The reason for that is that while guarantors bring more equity/security/deposit to the table, they don’t tend to bring any income. Your ability to service debt is a direct function of income. Unfortunately, the amount of equity parents bring to the table doesn’t change that.

    As a result, the only way to get a bigger mortgage with parental help is for the parents to be joint borrowers. That means parents would be equally responsible for making mortgage payments, which is not usually their intention. Parents also have to go through a credit assessment process, and if it’s been a while since they last did that, they will probably find a colonoscopy is more comfortable.

    Parents can still help by writing out a cheque, so to speak, and we’d strongly recommend that it be (a) documented and (b) done by way of an interest-free loan rather than a gift.

    5. Hard graft

    It’s easy to focus on external assistance; however, the truth remains that the journey to homeownership is, at its core, a personal endeavour fuelled by your dedication to achieving a financial milestone (I stole those words from someone else, but they are spot on!).

    Saving for a deposit demands a commitment that extends beyond financial considerations. It requires discipline, sacrifice, and a strategic approach to managing your finances.

    More than that, the act of saving cultivates financial responsibility and resilience. It instils a sense of financial literacy, empowering you to navigate the complexities of homeownership with a keen understanding of your financial capabilities and limitations.

    In conclusion

    While grants and assistance programs undoubtedly provide a valuable boost, the true essence of securing a deposit lies in the sweat you personally invest into saving for it.

    Whichever pathway you want to investigate, we at Hastie Mortgages can help, so please reach out.

    NB: We want you to know that the specifics of government schemes and regulations are subject to change. We strongly advise consulting official sources or seeking guidance from financial advisors to obtain the latest and most accurate information.