There have been some changes to the deposit requirements when purchasing a property in New Zealand. These changes have forced banks in New Zealand to only accept 10% of their total lending to customers with less than a 20% deposit.
There are however other opportunities to purchase property with less than a 20% deposit.
KiwiSaver
- If you have been in KiwiSaver for more than 3 years and meet some other
basic criteria then you are more than likely able to access funds from your
KiwiSaver provider. This is becoming a popular avenue in finding assistance
with deposit funds.
- Although there are some exclusions, this assistance is generally only available
to people purchasing their first family home.
First Home Buyers Subsidy – Housing New Zealand
- This subsidy is closely linked to the length of time you have been in your
KiwiSaver scheme and contributions made to your KiwiSaver. If you meet
certain criteria you are able to receive $1,000.00 for every year you have
been in KiwiSaver up to a maximum of $5,000.00.
- This subsidy is available for each application. So if there are two applicants then
you could be eligible for up to $10,000.00 to help towards the required deposit.
- Although there are some exclusions, this assistance is generally only available to
people purchasing their first family home.
The Welcome Home Loan product.
- This product has been placed on the market by Housing New Zealand and only
requires a 10% deposit when purchasing your first home. There are certain
restrictions to this product so please click here to see if you qualify for a
Welcome Home Loan, or contact us by phone to discuss other options available.
For more information click here.
Gifted deposits.
- So if you don’t have the full 20% saved you may be able to ask a family
member for assistance. A gift (please contact us for the guidelines around
a gift) can only be made by a family member and is helpful when you have
not saved the full deposit amount required.
- The family member simply gifts you the difference between what you have
saved and what the deposit amount is required to add up to 20%.
E.g. if you have $40,000.00 saved and need a deposit of $60,000.00, then a family member can gift you another $20,000.00 to complete the deposit amount required.
Using a family members existing equity – A guarantor
- This is similar to a gift but revolves around a family member already owning
a home or rental property with enough equity (the difference between the
value of the property and the existing mortgage) to help with the deposit
required.
- A drawback of using a family member’s property to aid in offering enough
deposit is you are forced to use the same lender as the person whose property
you are using.
- You are also placing the family member who guarantees the loan in a position
where if you fail to repay your mortgage the lender can demand payment from
the family member who gave the guarantee in the first place.
How much is a 20% deposit?
The easiest way to find out how much deposit you have as a percentage of the purchase price of a house you may have found is to grab a calculator and do the following.
- Enter the purchase price of the house you wish to buy
- Push the X (times) button
- Enter 20
- And push the % button
The answer that comes up is the deposit required by the lenders at 20%.
Please feel free to contact us if you have any questions relating to deposit funds.
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