Getting your home deposit together
Starting out on the home buying journey is exciting, but it can also be a bit daunting. Here are some tips for getting a deposit together for your home.
01
Start saving a regular amount now
Save a regular amount of your income as you get paid. We can help by setting up an automatic payment to transfer money from your transaction account to your savings account every pay day.
A good savings history could help when applying for an ASB home loan as this is something we will consider when you apply. Establishing a budget, and sticking to it, may also help you to save regularly and figure out what level of mortgage payment you are comfortable with.
Choose a savings account
Once you’ve worked out how much you can afford to save and what your savings goal is, the next step is to determine the best savings account to help you achieve your goal.
- Savings Plus allows you to earn interest on every dollar you save. Plus if you make no withdrawals during a calendar quarter, you earn reward interest. If you make one withdrawal during the quarter, you’ll earn partial reward interest.
- Savings on Call lets you dip into your savings when you need to. It has a tiered interest rate so the more you save, the more interest you could earn.
- ASB Cash Fund is similar to Savings On Call but may offer a better after-tax return if you’re on a higher income tax rate.
If you’ve already got some money saved up, you may want to put your money into a fixed-term investment account.
- Term deposits enable you to earn a fixed interest rate for a fixed period of time. Simply choose the timeframe and how you want the interest to be paid.
- ASB Term Fund is similar to a term deposit but may offer a better after-tax return if you’re on a higher income tax rate.
Tips to help boost your savings
02
Use KiwiSaver to buy your first home
After three years of saving with KiwiSaver you may be able to make a KiwiSaver first home (or previous home owner) withdrawal to help buy your first home.
There are eligibility criteria and other requirements you’ll need to meet. You’ll find these here. A solicitor or conveyancing practitioner can also advise you on this.
KiwiSaver HomeStart grant
You could be eligible for a KiwiSaver HomeStart grant of up to $5,000 to purchase an existing home, or up to $10,000 when building or purchasing a new home.
If you’re building or purchasing a home with someone else and they are also eligible, you could get up to $20,000 between you. Check here to see if you and the property might be eligible.
Do you have enough for a home deposit?
To get a home loan your deposit will generally have to be 20% of the property's value but it all depends on your individual situation. Please talk to us about an ASB home loan.
03
Using family help
Getting help from your family could enable you to get into your own home faster. There are some things to consider though, so we suggest you get independent legal advice before deciding your next step.
Getting family support through a guarantee
With this option, your family member becomes a guarantor and guarantees to the lender that your loan will be repaid. Their own home may also be used as extra security for your loan.
You need to be aware that your family member’s property is potentially at risk if you (or they) don't make your loan payments. You’re primarily responsible for repaying the loan, but if you don't, your guarantor will be asked to make the payments on your behalf.
Providing a guarantee is a serious decision and any guarantor should get independent legal advice.
Asking family members to help toward your deposit
Getting a loan from family could be a good idea if you’re finding it hard to get a deposit together. However we’ll need to make sure you can service both loans.
Typically a lender will ask for written evidence of this loan. This can be a good thing as it ensures the terms of the loan are clear to everyone. Talk to us if your family arrangement grants them a security interest or charge over the property as you will need our consent. We will need to assess this on a case by case basis due to the Reserve Bank of New Zealand loan-to-value restrictions.
Don’t we all love gifts?
If you’re lucky enough to be given a large amount of money, why not put it towards your home deposit? Ask us about how this could work with an ASB home loan.
Other helpful guides
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The above information is a guide only and should not be relied on as it does not take into account your personal financial situation.
