Saving a deposit for a house
There are several things to consider when you’re thinking about buying a house – what size deposit you’ll need, how you’ll save for your deposit, and how you’ll afford your ongoing mortgage payments. It might seem a bit back to front, but rather than starting with the type of house you want, try starting with the level of mortgage payments you’ll be able to afford.
Our guide to buying a home
Buying a home is an exciting process. But there is a lot of information to digest and sometimes it’s hard to know where to start.
Our handy home buyers’ guide PDF 501KB could help you make good decisions throughout your home-buying journey.
Work out what you can afford
What payments can you afford?
Find out how much you will be able to put towards home loan payments by doing a budget to see how your weekly, fortnightly and monthly expenses compare to your income. Or use our home loan repayment calculator as a guide to work out what your repayments could be.
How much can you afford to borrow?
Use our online calculator to figure out how much you could borrow based on the loan payments you can afford to pay each fortnight or month.
Calculate how much you’ll need for a deposit
If you are a first home buyer looking to purchase an existing home, in most instances you will be required to have a deposit that is 20% of the home’s value. This means that for a home worth $500,000, you will likely need a deposit of $100,000.
If you have a deposit less than 20% of the home's value, you may still be able to get a loan. However, due to Reserve Bank of New Zealand LVR restrictions, any application for home lending with less than 20% deposit will have to undergo a review to see if we can approve your lending application. A low equity fee may also apply.
Property investors wanting to invest in residential property in New Zealand will need a 30% deposit, unless the property they’re looking to buy meets exemption criteria.
Make a plan to save for your deposit
Now you know what your goal is, it’s time to start some serious saving. Here are the basic steps.
- Use your income vs expenses budget to decide on a regular amount that you can comfortably save towards your deposit.
- Have that amount transferred each time from your everyday account into a high-interest savings account.
- Use a savings calculator to find out when you’ll reach your goal.
- As your savings grow, ask the bank about moving some of it into a low risk investment option, like a term deposit that might pay more interest.
- When you get close to reaching the deposit needed, you can start planning! Begin by thinking about things like house size, location and proximity to amenities like schools, public transport and shops.