One of the most common questions we get at AdviseNow is: “How much do I actually need to save for a house deposit?” While the 20% rule is the gold standard, the reality in the New Zealand property market is more nuanced.
The 20% Standard
Banks prefer a 20% deposit because it reduces their risk. If you have 20%, you’ll likely get the best interest rates and avoid “Low Equity Margins” (LEM) or “Low Equity Fees” (LEF), which can add significant costs to your monthly repayments.
Low Deposit Options (5-10%)
Don’t have 20%? You’re not alone. Many Kiwis enter the market with less. The First Home Loan (supported by Kāinga Ora) allows for a 5% deposit for eligible buyers. Some banks also have their own “low equity” lending pools, though these often come with stricter criteria and higher costs.
Using KiwiSaver and Grants
Your deposit doesn’t just have to be cash in a savings account. It can include:
- KiwiSaver first-home withdrawal
- First Home Grant (up to $10,000 for couples)
- Gifts from family (often requiring a “gifting letter”)
Key Takeaways
- 20% is ideal but not always mandatory.
- Low deposit loans often have higher interest rates.
- KiwiSaver is a powerful tool for building your deposit.
Disclaimer: This information is general in nature and does not constitute personalised financial advice.
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