There are lots of ways to get a deposit together, we’ve outlined the most popular ways below:
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.
Benefits of the KiwiSaver first home withdrawal
With the KiwiSaver first home withdrawal facility you may be able to withdraw some of your KiwiSaver savings (including any employer contributions and annual Government contributions) to help you buy your first home if:
- you have been a member of KiwiSaver (or a complying superannuation fund) for three years or more;
- you have not previously made a withdrawal from your KiwiSaver savings to buy a home;
- this will be the first time owning your own property or land (or you qualify as a previous home owner);
- you intend to live in the home that you are buying or you intend to build a home to live in on the land that you are buying; and
- the property or land is located in New Zealand.
It’s important to know:
- Until 1 June 2015, your KiwiSaver savings cannot be used as part of any initial deposit you need to pay the real estate agent or vendor.
- There is a ten working day deadline to meet to ensure your ASB KiwiSaver Scheme savings are released in time for settlement. This means we need to receive your application documents at least ten working days before settlement.
From 1 June 2015, legislative changes will allow a first home withdrawal to be used to make deposit payments in certain circumstances. Various restrictions may mean that you will not be able to use your first home withdrawal for deposit payments in all sale and purchase transactions e.g. auctions. Your solicitor or conveyancing practitioner can advise you further in this regard.
KiwiSaver HomeStart grant
Housing New Zealand Corporation (HNZC) may also provide eligible KiwiSaver members with a KiwiSaver HomeStart grant of up to $5,000 for purchasing an existing home or up to $10,000 for building a new home or purchasing a newly built home. HNZC can confirm if you and the property are eligible for this grant (minimum contribution levels and certain income thresholds and regional house price caps apply).
Previous home owner
If you do not currently own a home or property but have done previously and you think you may be in a similar financial position to a first home buyer, you may be eligible for approval by HNZC as a previous home buyer previous home owner (criteria apply).
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.