Save, save, save – there’s no tricks here, it’s as simple as spending less than you earn and putting that money aside where you can’t touch it. How? Increase your income – second job, get promoted, move jobs, get flatmates. Reduce your expenses – get a cheaper flat, live at home, get rid of short term debt, review your variable expenses – i.e. the non-essential cost to live e.g. eating out, entertainment. If you can save $200 per week, that’s over $50k in 5 years and 10% deposit on a $500k home.
Kiwisaver – get money from your employer to put towards your house deposit, this is a no brainer but it does mean you are eating into your retirement fund.
Kiwisaver home start grants – if you have been a contributing member of Kiwisaver for 3 years or more and fall within the house price and income caps within your region, you may be eligible for government grants ranging from $3,000 to $10,000 per person. For more info, see HNZC.
Gifted funds – lucky enough to have parents or family members who are able to help you into your first home? Gifted funds must be non-interest bearing and non-repayable, and a gifted funds declaration will need to be signed by the gifter for approval purposes.
Family loan – parents wanting to help out but want their money back eventually? This is another common way folk are doing it these days. Either money is borrowed from the bank under the parents name and the kids repay it or the parents come up with their own repayment amount and term. Either way, the loan repayment has to be factored into the servicing calculation by the bank to ensure you can afford to repay your parents loan and the bank’s loan.
Guarantor – this is where equity in your parents home is used as security against the new purchase satisfying the banks requirement to have 20% equity on a property. However, the loan term on the portion of lending being used as security is usually only 5 years to ensure the parents are released from their guarantee in a finite period of time, or at least before they retire. This is all factored into the servicing calculation conducted by the bank so often income is a limiting factor here. The value of your parents home is also considered in this situation.
