Let’s talk money!
Just how much do you need to buy a home? As a rule of thumb, try to have at least 20% of the purchase price saved up. There are exceptions to this rule, which we will talk about soon, however the best rates are generally available when you have 20% or more.
Let’s run some numbers…
Say the home you want is for sale at $450,000. That means you should have $90,000 at hand for a deposit before the bank will come to the party with the remaining $360,000.
Still don’t have 20%? Don’t panic!
Another option to boost your deposit could come from a family member either as a Guarantor or as a gift.
You can use a cash gift from your parents (or anyone else) as part of your deposit. they will need to sign a gifting certificate (which your adviser can provide) confirming where the money came from and (most importantly) that they do not require you to pay it back.
Being a guarantor, your family member will not have to front up any hard cash for your loan and instead their property can be used as security. Conditions do apply, but we can help you and your family work through those and make sure this will be affordable for all parties involved.
And if you can’t use Kiwisaver or don’t have the Bank of Mum & Dad to help? There may still be options…
Building a home is another way of getting onto the housing ladder without requiring 20%. New build properties are exempt from the Reserve Bank of New Zealand’s LVR (Loan-to-Value Ratio) rules which means you can put down 10% of the total price and the lender will front the remaining 90%.
There is also the Welcome Home Loan scheme, which only requires a 10% deposit. Welcome Home Loans are underwritten by Housing New Zealand and this allows select lenders to provide loans that would otherwise fall outside their lending policies. Our advisers can help you work out if you’re eligible for this scheme.
Whatever route you take, bear in mind that the bigger your deposit, the lower your loan amount = less interest you will pay in the long term… and who doesn’t like saving money?