Discover alternative options for financing your first home in New Zealand, where a 20% deposit is standard. Learn how to secure a mortgage with a 10% or 5% deposit as a Low Equity Borrower, provided your combined income is under $150K. Explore government initiatives like KiwiSaver, offering the chance to withdraw savings for a home deposit, and Kāinga Ora's First Home Grant and First Home Loan, which can contribute up to $10,000 and allow a 5% deposit, respectively.
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“I am wanting advice on home loan deposit. My partner and I got our first property just over 5 years ago but sold it last year as we had planned to move to Sydney.
We are now thinking about buying again but wanted to know if it’s still possible to qualify for first home buyer 10% deposit? I’m a bit confused by this and hoping someone can clarify.”
(Original question on Reddit)
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In New Zealand, the ideal deposit for a home purchase is typically 20% of the purchase price. However, there are options available for those who may not have this amount saved. You could potentially secure a mortgage with a 10% or even a 5% deposit as a Low Equity Borrower. However, to qualify both you and your partner would need to earn less than $150K combined.
The New Zealand government has several initiatives in place to assist first-home buyers. One of these is KiwiSaver, a scheme designed to help individuals save for their retirement. If you’ve been a member for at least three years, you may be eligible to withdraw some of your KiwiSaver savings to put towards a home deposit.
In addition to KiwiSaver, Kāinga Ora offers the First Home Grant and the First Home Loan. The First Home Grant can contribute up to $10,000 towards the deposit for eligible buyers. The First Home Loan allows eligible buyers to apply for a home loan with as little as a 5% deposit.
Both of these initiatives have specific eligibility criteria, including income caps and limits on the purchase price of the property. Plus, You could potentially not qualify for these schemes if you have already bought a house in the past.
It’s crucial to seek independent advice from a mortgage adviser before making any decisions regarding your deposit and loan product.
Please note that the deposit for your first home can come from various sources, including savings accounts, term deposits, KiwiSaver, First Home Grants, financial gifts from family, or the sale of assets.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances or contact National Capital.
