Date: 17th Jan 2022
It's an exciting time when you can start thinking about buying your first home and experiencing the feeling of security in your own space, as well as being able to change the wall colour!
We know it can be difficult preparing to buy your first home, as you have to cover several costs upfront before even thinking about a home loan. So, we're here to help!
Our sales team has supported many first home buyers in New Zealand, so we've listed our top tips for saving for your first home. These strategies will help you begin your journey to home ownership today.
Possibly one of the most daunting first steps for first-time home buyers is paying off as many of their current debts as possible. Having a clean slate will make it easier for first home buyers to be approved for future home loans and will also improve their credit rating.
The sooner you begin, the easier it will be. Each week, allot a set amount from your income to go towards paying off your current debts. If you have several short-term debts, consider consolidating them into a single loan at a lower interest rate to help you meet the payments and pay them off faster.
Saving up to buy your first home can be a lengthy process, so it's best to start as soon as possible. Even putting aside as little as $5 per week can work wonders. Remember that small, consistent efforts add up over time.
One of the most essential steps to buying a house is budgeting—tracking your income versus expenses to see where your money is going. Consider the 50-20-30 rule: 50% for essentials, 20% for savings, and 30% for everything else. The real trick is to start small and then build on your savings as your disposable income increases.
The New Zealand Government-backed First Home Loan program can supplement your savings, making it an ideal part of a broader savings scheme for first home buyers.
You can save up to $2,000 a year by not purchasing coffees and preparing food at home. These simple tips on how to save money for a house can dramatically increase what you're able to put away each month.
Plan your meals at home, budget your groceries, and cut down on takeaways and dining out. Making coffee at home instead of ordering at cafes can save up to $1,000 annually. Consider this: a $9 jar of instant coffee can provide 20-25 cups, compared to cafe coffees that cost up to $150 for the same amount!
Set yourself goals and celebrate the small wins. Keep a spreadsheet to monitor how much you're putting into your savings account. This visibility helps you understand exactly how much to save for your first home and track your journey.
If savings fall by the wayside due to unexpected costs, keep the faith and start saving again as soon as possible.
Talking to a mortgage broker can help you set savings goals that will put you in the best position to buy your first home. How much money do you need to buy a house in your desired area? Knowing this is crucial for effective planning.
Don't be afraid to ask for help, and it's never too soon to start familiarising yourself with the market. Visit open homes in your area and stay in touch with agents to see what properties sell for. Our salespeople at Tremains are available to help home buyers begin taking steps towards buying their first home.
Evaluate your spending and cut unnecessary purchases. Ask yourself: "Do I really need this?" Some simple ways to cut back include:
We're not saying don't have fun; just find more affordable ways to enjoy yourself while saving. If you’re wondering when to start saving for a house, the earlier you begin, the better. Read more helpful tips on how to make your money go further.
Sell off things you don't need or want, and the funds you generate can give the deposit for a house a nice boost. Having an organised home can also benefit other aspects of your life, including maintaining good savings habits.
Set up automatic payments to ensure you're regularly depositing money into your savings. Begin with a small amount you won't miss, such as $5 or $10 a week, and increase it as you go. This is one of the simplest steps you can take to begin building your down payment on a house. As your income increases, consider increasing your automatic payments proportionally.
In New Zealand, the KiwiSaver first-home withdrawal scheme is a valuable tool to help you buy your first home. Most of us have had a KiwiSaver savings account since we started working, with funds being deducted from our wages along with employer contributions.
Using KiwiSaver for house deposits:
If you’ve owned a home previously but are now in a similar financial position as a first-home buyer, you may be eligible for a KiwiSaver first home withdrawal. Kāinga Ora can assess this and provide confirmation.
First Home Loan is a government-backed initiative designed to help first-time home buyers in New Zealand overcome financial barriers to home ownership. With this loan, you only need 5% instead of the usual 20% deposit. Kāinga Ora underwrites the loan, enabling banks or lenders to accept a smaller deposit.
To apply, you need to:
Participating lenders and banks might also have their own criteria for lending money to first home buyers.
Kāinga Whenua helps Māori to build or buy a home on ancestral land. It’s available for individuals or collectives, such as land trusts. Kāinga Ora tenants may be eligible for a Tenant Home Ownership Grant.
Share your goals with friends and family to help you stay accountable. Whether it's splitting bills when possible or meeting at home instead of going out, your support network can help you reach your goals.
Financial educator and property investor Lisa Dudson says that keeping your savings goals top of mind and feeling positive about them makes them easier to achieve.
Setting yourself a challenge—either with others or just on your own—will put you on a firm footing to reach your goals. Taking small steps early on will benefit you in the long run.
As a first home buyer, you’ll need to remember that the deposit is just one of your expenses. Ensure you budget for the following when buying residential property:
Understanding the average house deposit requirements in your area is just the first step. You should typically plan to have an additional 2-4% of the purchase price available for these extra costs.
Most New Zealanders take 3-5 years to save a 20% deposit, though this varies based on income, location, and savings rate. First home buyers can potentially reduce this timeframe by utilising KiwiSaver first home withdrawals, Kāinga Ora First Home Grants, and maintaining consistent savings habits. Creating a dedicated savings plan with automatic payments can help you reach your goal more efficiently.
Beyond your deposit, budget for 2-5% of the purchase price to cover additional expenses. These include one-time costs like legal fees, building inspections, LIM reports, and valuation fees. Also, plan for moving costs, immediate repairs, and connection fees for utilities. Having this buffer will help you avoid financial stress during the exciting transition to homeownership.
Every dollar counts when buying your first home, so the earlier you start saving, the better. Automating your savings and maximising your KiwiSaver from a young age can go an exceptionally long way in ensuring you can achieve home ownership sooner rather than later.
While most lenders prefer 20%, options for lower deposits include:
Understanding these costs is crucial in saving for a house deposit. Our Tremains consultants are here to guide you every step of the way.
Now you've read our saving tips for first home buyers, why not take that first step and contact your preferred Tremains consultant today? Our experienced team can help you understand the local market, connect you with reliable lenders, and guide you through the process of buying your first home. Browse our available residential properties in areas like Hawkes Bay, Wairarapa, and Waikato or contact our team directly to start your journey to homeownership.
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