There’s no point in sugarcoating it – saving a deposit to buy your first home can be a massive challenge. You’ll most likely need 20 per cent of the property’s value, which is a whopping $100,000 for a $500,000 home.
While the task may be imposing, it’s definitely not impossible. Thousands of proud Kiwis move into their first homes every year – so there’s no reason why you can’t make it happen.
Use these 10 tips to fast-track your deposit-saving efforts.
- Set a realistic goal
Take a look on Homes.co.nz at the prices of properties in the area you’d like to live, focusing on the most affordable options. If properties are too expensive, consider a different area. Once you have an idea of how much you need to spend, divide that number by five – that’s your 20% deposit.
- Make a plan
Once you’ve got your estimated deposit amount, make a plan to reach it. Compare your monthly income to your expenses and figure out how much you can realistically save each month. Once you know that amount you’ll be able to figure out how long it’ll take you to reach your goal.
- Automate your saving
Set up an automatic payment into a high-interest savings account on the day that you get paid so that you don’t even have to think about putting money away for your deposit.
- Track your spending
Take a couple of minutes every week to log into your internet banking and look over your spending. Think about the areas where you over-spent and make a note to cut back next time (small changes can make a big difference).
- Make a change
If it’s going to take too long to save your deposit then think about how you can make a change so that you can reduce your expenses and save more. Could you move back in with parents until you buy? How about moving to a cheaper rental or cutting other large expenses?
- Apply for the HomeStart Grant
After three years of contributing to KiwiSaver, you may be eligible for a HomeStart grant if you meet certain criteria. This will give you up to $5,000 towards purchasing an existing home and up to $10,000 if you’re building your home or purchasing a new build (if you buy with a partner or friend who is also eligible you could get double that).
- Pump up your KiwiSaver
Make sure you’re putting at least $1,042 each year into your KiwiSaver each year, as this will entitle you to a handy $521 savings boost from the government.
In some cases, it may also be a good idea to increase your Kiwisaver contributions to the maximum 8% to boost your savings. You should also compare your fund’s performance to others and if it’s not showing high returns, consider switching to one that is (make sure you seek proper financial advice from an expert before making any changes).
- Check out the Welcome Home Loan
The Welcome Home Loan is offered by select lenders and underwritten by Housing NZ to help first home buyers get into a property. If you’re eligible, it’ll allow you to purchase a home with just a 10 per cent deposit.
- Consolidate your debt
If you’ve got a lot of debt, lenders are less likely to approve your loan and it’s much harder to save money. Before you start saving, it could be a good idea to consolidate all your debts into one easy low-rate loan so that you can pay it off as quickly as possible.
- Get help
Are you still a little lost? We don’t blame you – buying your first home can be daunting and saving the deposit might just be the hardest bit.
Don’t forget that you’re not alone. If you need advice from a friendly, impartial expert get in touch with a mortgage adviser here at Money Empire.
We were all first home buyers once, and our service is completely free in most cases!