Six tips for saving your deposit

One of the biggest hurdles on the path to homeownership is saving your deposit, but talking about it isn’t going to fill up your bank account any faster, so let’s look at what you can do.

The first move is to find out how much you need to save. As a rule of thumb, you’ll need to save up 20 percent of the property value, but there are exceptions to this and government support is available for some first-time buyers, which can lower the bar. If you’re not sure it pays to get a mortgage broker on your side. Talk to us about helping set a saving goal.

Once you have your target in mind try using some of these tips to help reach it.

Make a budget

It’s important your expectations align with your budget so you know what you can and can’t afford. Try our online calculator to get an idea of how much you can borrow and be realistic about what sort of property you can afford.

Then, set a realistic budget by listing out all your expenses against your income and take a look at how much you need to save to reach your goal. You might need to make some changes, cutting out that extra coffee or dropping a few channels on your MySky subscription, to make things balance.

Stick to your saving goals

Discipline is the key to your saving success. Aim to put away a minimum amount each week then, at the end of the month put in any extra money you have saved. Make sure you have your accounts setup so your savings account is earning decent interest - every little bit helps!

Sort your personal debts out

Getting rid of your personal debt not only saves you money on interest payments, it also increases your borrowing power. What’s more, once your credit card, hire purchase and personal loans are repaid, you will have extra money to go into your savings account! It could be worth looking at consolidating your short-term debts into a lower rate loan to so you can manage them more easily and pay them off faster - we can help.

See what help you can get

Government grants are a great way to boost your savings, if you’re eligible. You can also access money in your KiwiSaver to help beef up your deposit.

Let’s not forget the bank of mum and dad. Parents can gift money to their children, act as guarantors, or get loans in their names and lend it to their children. There are risks involved and various ways to structure things so make sure you get professional advice!

Start now

Banks look at a variety of things when considering your eligibility for a home loan, one of these is account conduct. This means being able to demonstrate good saving habits goes a long way. Having good saving habits could mean the difference between being approved for finance or not. It goes without saying that the sooner you get cracking the sooner you will be in a position to buy!

Look at non-bank lenders

Not all lenders are created equal. We work with a large panel of lenders to ensure you have access to a range of options. Non-bank lenders aren't restricted to Reserve Bank rules and often have loans suitable for those with less than a 20 percent deposit. Like anything there are policies and criteria involved so it’s important to talk to a mortgage adviser about whether this is right for you.

If you’d like to find out more, please register for one of our first home buyers seminars or download our first home buyers guide here