Owning your own home in New Zealand is part of our culture. As prices have increased in recent years, this Kiwi way of life has felt more burdensome for many to make a reality. So how much deposit do you need to buy a house in NZ? Saving for a home is still within reach for many who understand their options.
The mainstream banks’ requirement for a deposit to buy a home in New Zealand depends on several factors. The standard requirement is a minimum 20% deposit (80% LVR) for an owner-occupied property. 30% is required (70% LVR) for an investment property.
However, banks can approve a limited number of loans with smaller deposits. Banks can allocate 20% of their lending, to owner-occupiers with a loan-to-value ratio (LVR) of over 80% . They can also allocate 5% of investor lending, to borrowers with an LVR of over 70%. The opportunity to get a home loan with a lower deposit comes and goes with each lender, depending on what they have on their books. This is where engaging a mortgage adviser, like Platinum Mortgages, is vital. Mortgage advisers keep across the deals available in the market and can alert you to opportunities when they arise.
Finding a deposit for a house is hardest for first-home buyers as they don’t yet have any equity (funds) accumulated in a property. The First Home Loan can get eligible buyers into their first home, with as little as a 5% deposit.
Then, there are the options outside of the mainstream banks. Non-bank lenders may only require a 10%-15% deposit. These lenders have higher interest rates but can be an excellent option for many who want to get into the market and start paying off their own home rather than their landlord’s mortgage. It’s essential to understand the costs of this option and budget accordingly – we can help with that!
As you can see, people with less than a 20% deposit can buy their dream home, but only if they have up-to-date information and are positioned to act on opportunities. That is why they come to Platinum Mortgages. As the first step, we gain an understanding of your finances. We will then advise you how much you can borrow with your deposit. If needed, we can work on a plan with you to achieve the deposit price of your desired house. We then manage the application process for you, so no stressful conversations with the banks!
What the lenders need to know
Most lenders want a guarantee that you can repay your loan once the contract is signed and the house is yours. They do this by:
- Looking at your income: your financial transactions, savings, credit lines, and how responsible you have been with previous rent or mortgage payments.
- How much deposit you currently have: your savings, KiwiSaver and gifting from parents or relatives.
Contact Platinum Mortgages to fully understand what information you need to provide for your mortgage application. We’re here to help you navigate financing a home from start to finish.
Make sure you can afford your repayments
Especially for a first-time buyer, the most important thing to consider is whether you can afford your mortgage repayments. Every lender will have different interest rates. You can use our Mortgage Repayment Calculator to work out your monthly, fortnightly, or weekly mortgage repayments.
At Platinum Mortgages, we will work with you to create a budget plan before you start looking for a property. This will help you build your deposit and prove to the lender that you have sufficient income to repay your mortgage.
You don’t need answers, just expert advisers
Talk to Platinum Mortgages for expert advice today. We will then provide you with the best advice for your particular situation. We consider aspects such as deposit amount, mortgage term, interest rates, loan structures, affordability and sustainability, planning for a rainy day and exit plans. The result is personalised advice and support to get you into your dream home.
Updated: 23rd July 2024