Saving for your home deposit

Saving for your first home deposit is the first big step towards buying a property. While it can feel overwhelming to save for such a significant amount of money, we want to help simplify the process for you.

Here are four steps to getting started and be successful in saving towards your first home deposit.

1.      Understand roughly how much you’ll need to save

Start by researching property prices in the area/s you are considering buying. Once you have an average property price in mind, aim to save for a 20% deposit of the property price as most lenders will be looking to lend to people with a deposit of at least 20%.

You may also want to start considering the extra costs involved with purchasing a property. For example, legal fees, inspections, insurance. You could even go further and consider the furniture and appliances you’ll need to purchase once you’ve purchased a property if you want to be as prepared as possible. Preparation is key. 🔑

2.      Get serious with your saving

As early as possible start to get serious with your saving habits.

• Assess your income and expenses to work out how much you can save each pay check and therefore, how long it will take you to save for your deposit.
• Use a high interest savings rate to get the best return over the time you’re saving.
• Find ways to cut unnecessary expenses. Things to look out for: subscriptions you don’t use/could live without, regular dining out you could cut back on, impulse spending.

Hot tip: Work out how much your estimated repayments could be based on the property prices you are considering. And if possible, with your current financial situation, try to save the amount you’d be paying in repayments each pay check. This can help prepare you for when you start paying repayments on your home loan in the future.

3.      Look into how you can grow your deposit faster

Utilising your KiwiSaver is a great way to reach your savings goal faster as you can receive employer and government contributions. You may also want to consider increasing your contributions while you are saving towards your deposit in order to maximise your returns.

You could even look into side hustles, freelancing, selling high value items you don’t use often to help give your savings a boost.

4.      Regularly monitor and improve your plan and budgets

Set up a reminder every month or two to check in with how your progress is going and adjust your budgets or savings strategy as needed. Small tweaks here and there can be greatly impactful over the long term.

Also, regularly check in on the current house prices and market interest rates. Depending on how long you need to save for your budget, house prices and the market may change meaning you may need to reconsider budgets or your preferred location.

Dosh does not provide any financial advice or recommendations. Any information we make available to you does not take into account your particular investment objectives, financial situation, or investment needs. None of the information we provide can be taken as investment, financial, or tax advice.