Getting your deposit together

There are lots of ways to get a deposit together, we’ve outlined the most popular ways below:

Saving

A great way to get your deposit together is by saving a regular amount of your income. We can help you achieve this goal by setting up an automatic payment to transfer money from your transaction account through to your savings. To make things easier, you can align this automatic payment to go out at the same frequency your pay goes in.

Establishing a good savings history will work in your favour when you apply for your loan. If you demonstrate that you can stick to a budget and save regularly, you’ll be more likely to qualify for a home loan.

Getting started with savings:

If you haven’t set your budget, you might like to go back a step and check out our budgeting ideas and budget spreadsheet.

1. Set up a regular automatic payment into a savings account like FastSaver. This will allow you to earn interest on every dollar you save, plus you’ll pay no base or transaction fees.

2. As your savings increase you can start to look at our Term Deposits. We’ve got a great range of terms to suit your needs, from 30 days to 5 years. Your interest rate will depend on the sum you have to invest and how long you want to invest for. This is also a great way to make sure you’re not tempted to dip into your savings.

Are you in the 30% or 33% tax bracket?

Once you’ve saved $500, you can open an ASB Cash Fund account. This account is a tax effective alternative to an online savings account, and is an attractive option if you have a personal tax rate of 30% or 33%. With a Cash Fund account you’ll generally pay final tax at a maximum of 28%.

To view our other savings account options, click here.

KiwiSaver

You may be eligible to withdraw some of your KiwiSaver contributions to use towards the purchase of your home.

This is called a ‘first home buyer withdrawal’ for first home buyers, or a ‘second chance home withdrawal’ for those who have owned a house in the past but did not benefit from this purchase and are essentially in the same position as a first home buyer. You’ll need to contact  Housing New Zealand to see if you qualify as a second chance home buyer.

Some important things to note:

  • You’ll need to have been a member of KiwiSaver for at least three years or it has been at least three years since Inland Revenue received your first contribution.
  • You can withdraw both your individual contributions and your employers (but not the Government’s kickstart contribution or the member tax credits). 
  • There are conditions that apply, so contact your KiwiSaver scheme provider for more information. If you’re a member of the ASB KiwiSaver Scheme, you can check the details online.

How does it work?
Any approved funds from the KiwiSaver first home buyer withdrawal or second chance home withdrawal are payable to your nominated Solicitor for use on settlement day only. This means you will not be able to use the funds as your deposit upon signing a sale and purchase agreement. Have a chat to us if your withdrawal has been approved and you need help covering the additional amount until settlement.

The Government first home deposit subsidy
If you’ve been contributing to KiwiSaver for three or more years, you may also qualify for the Government’s first home deposit subsidy. This is subject to your income level and other eligibility criteria.

You could get a one off payment of $1,000 for each year of contribution to a KiwiSaver scheme (or a complying fund or exempt employer scheme) up to a maximum of $5,000.

If you’re buying a house with your partner, you could get a combined subsidy of up to $10,000.

How does it work?
Any approved funds from the Government first home deposit subsidy are payable to your nominated Solicitor for use on settlement day only. This means you will not be able to use the funds as your deposit upon signing a sale and purchase agreement. Have a chat to us if your subsidy has been approved by Housing New Zealand and you need help covering the additional amount until settlement.

Gifting

As the name implies, this is when you are given a lump sum towards your home deposit. You will have to show proof of where the money came from, and that there is no requirement to pay this back. If you are being lent money for a deposit, you need to read the section below “help from your family” as the conditions will be different.

With gifting, you still need to consider the following:

  • You may be asked to show evidence of a savings history and that you have saved some of the money yourself.
  • It’s important to seek legal and tax advice.

Help from your family

Aside from gifting, there are other ways that your family could help you into your home. Getting help from your family could help you get into your own home faster, which means you could be saving on rent and putting that money into your home loan. There are drawbacks too, take a look at a couple of your options below:

Using a family member’s property to secure the deposit

  • This means they become a guarantor and provide their own home as security. Your family member’s property is potentially at risk if you do not make your loan repayments.
  • As the borrower, you are primarily responsible for servicing the repayments on the loan, but if you default the guarantor will be asked to make the payments on your behalf.
  • If both you and the guarantor do not make repayments, it may result in both properties being sold to repay your loan.
  • We strongly recommend you and your family seek independent legal advice before entering into this arrangement. That way you are all aware of the benefits and risks.

Family members providing help toward your deposit

  • If your family loan you the deposit, you will need to be able to make the repayments on the loan, and the repayments for the deposit.
  • Your family may take out a loan over their property to help you with the deposit, so we need to make sure that you can service both loans. If you cannot afford all of your repayments, you may put your family member’s home at risk.
  • Again, we strongly recommend you and your family seek independent legal advice before entering into this arrangement.

The information expressed in this article is provided for general information purposes only, with the express disclaimer of responsibility and it does not constitute an offer of finance from ASB.

ASB's home loan criteria and a fee of $400 may apply. Early repayment adjustments may also apply. A low equity premium may apply. You will also need to have an ASB account.  Loans for business purposes are excluded.

ASB's Personal Banking Terms and Conditions (including the Investment Statement for Term Deposits) apply. ASB's current Disclosure Statement is available free of charge at any ASB branch.

For more information on the ASB Cash Fund see the ASB Cash Fund Investment Statement. The ASB Cash Fund is issued by ASB Group Investments Limited.  Investments in the ASB Cash Fund are not deposits with ASB Bank Limited.  ASB Bank Limited guarantees account balances and returns at the prevailing rate (before tax and any fees).  The guarantee is unsecured.

The ASB KiwiSaver Scheme is provided by ASB Group Investments Limited.  For more information on the ASB KiwiSaver Scheme, see the ASB KiwiSaver Scheme Investment Statement.