Help & Support

Saving a deposit for a house

July 2016 changes to loan-to-value ratio (LVR) restrictions

We have made changes to the current loan-to-value ratio (LVR) restrictions, following a proposal by the Reserve Bank of New Zealand in July 2016. These will impact new home loans for owner-occupiers and residential property investors. 

Find out more

There are two main things to consider when you’re thinking about buying a house – the deposit and the ongoing mortgage payments.

Set a savings goal

The first step is working out how much you’ll need for a deposit. Here’s how to figure it out. 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.

Step 1: What loan payments could 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.

Step 2: 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.​

Step 3: What deposit will be needed?

If you are a first home buyer, most banks will lend you 80% of the value of your home, i.e. a Loan to Value ratio (LVR) of 80%, so your deposit will be the other 20%. This means your deposit will be at least a quarter of the loan you can afford, which you worked out in step two, and a fifth of the house value.

So, if you worked out that you can afford the payments on a $400,000 loan over 25 years, you’ll need a deposit of $100,000. And you’ll be looking for a home worth around $500,000.

If you have less than 20% of the home's value, your application will be affected by Reserve Bank LVR restrictions.

If you're a property investor wanting to invest in residential property in  New Zealand, you'll need 40% deposit unless the loan falls within exemptions. Find out more about LVR restrictions.

Plan to reach your goal

Now that you know what your goal is, it’s time to start some serious saving. Here are the basic steps.

  1. Use your income vs expenses budget to decide on a regular amount that you can comfortably save towards your deposit.
  2. Have that amount transferred each time from your everyday account into a high-interest savings account.
  3. Use a savings calculator to find out when you’ll reach your goal.
  4. 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.
  5. 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.

If you need some help, please call 0800 080 222, visit us in store, or email us.