1. Talk to a specialist
Kiwibank’s Shannen Pihema has worked with many first home buyers and says the earlier you speak with a Kiwibank home loan specialist such as one of our mobile mortgage managers or banking specialists, the better. A one-on-one meeting with a home loan specialist is a great place to start your home buying journey. You don’t need to be ready to buy. “At the outset is a really good time to see us,” says Pihema. “Maybe you’re not quite ready to apply, but we can put a plan in place to make it smoother sailing when you’re ready. You don’t know what you don’t know until you ask. Our mortgage managers love to get in on the excitement of making your dream a reality.”
2. Create a spending plan
A spending plan or budget can help make money go further. It’s easier to budget than you may think. Click here to learn how to create a budget. A good start is to download your statements, work out what you’re spending now and split it into categories. When you see the numbers in black and white, you might find less-satisfying spending categories to cut. Set a regular time each month to review your budget. “When it’s a couple, being honest and open with each other really helps with budgeting,” says Pihema. “Make sure you set a budget that’s realistic.”
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3. Set goals
People who plan, set goals, and review them regularly tend to save more and reach their dreams earlier. Psychologists have found that simply writing goals down increases the odds of achieving them by 1/3rd. “A lot of my clients have found Kiwibank’s Goal Tracker tool really helpful. With Goal Tracker they can see that they're getting a little bit closer to their goal each month,” says Pihema.
4. Pay down consumer debt
Interest payments on consumer debt really eat into your ability to save. Every chunk of debt you can pay down, reduces the outstanding interest. Pihema worked with a client who had a significant amount of short-term credit card and buy-now-pay-later debt. “They focused on paying down as much as they possibly could and 12 months later, they had paid off a lot of their consumer debt. That was January and by June they were in their first home.” Try to continue to save into KiwiSaver even while you’re paying down debt because it can be a valuable investment towards your first home.
5. Stepping up the savings
Once interest-bearing debt is paid off, and you’ve built up an emergency fund, it’s time to get serious about saving your home deposit. Look at behavioural shifts you can make to become a better saver, says Pihema. Set up an automatic payment to savings for the day after your pay comes in. That way you won’t be tempted to spend the money you really want to save. Another trick is to deposit into a savings account the difference between your rent and the mortgage/insurance/rates you would pay when you buy. “It helps you save and gets you ready for when you’re paying rates and insurance and the mortgage payment.” Review your progress regularly. Every additional $2000 saved can in some cases, add up to $10,000 of lending for eligible borrowers says Pihema. Use Kiwibank’s First Home Buyer Calculator to work out how much you may be able to borrow, and compare different repayment scenarios.
6. Every dollar counts
A dollar you don’t spend is one that boosts your deposit. Clients who succeed in their home ownership journey use a multitude of strategies to get there, says Pihema. They start to question every purchase, for example. “Rather than impulse buying, take a step back and ask, ‘do I actually need this or is it something I want’,” she says. Another way is to set up rules, such as not buying anything non-essential until you’ve waited a week or a month. Another strategy clients often take is to up their savings whenever they get a pay rise. “Because of the pay rise it’s not such a hit,” Pihema says. Or increase your KiwiSaver from 3 per cent to 4 per cent or 6 per cent when the pay rise comes through. Making saving a game helps some people enormously. “Competing with your partner to save more is a fun game to play for some couples,” she says. “It really works if you have a competitive streak.” Another common game is having two jars with pebbles. Move a pebble from one to the other every time you save $5 or $10 that would have been spent otherwise. Treat yourself to something small when the jar is full.
7. Low deposit options for buying your first home
Goal Setting and getting into your first home are helped by understanding the big picture. For example, it’s a myth that first home buyers always need 20 per cent deposit to buy a home. If you’re buying a brand-new first home, including KiwiBuild, in some circumstances, you may only need a 10 per cent deposit. The Reserve Bank of New Zealand has eased loan to value ratios [LVRs] recently, which means some first home buyers can qualify to buy an existing home with just 10 per cent deposit. There are other schemes such as First Home Loan that can help you buy on a 5 per cent deposit if you qualify.
8. How to use Kiwisaver for your deposit
KiwiSaver can be a powerful way to save towards your first home. Its structured approach simplifies the saving and investment process, and can give you access to personal savings, employer and government contributions, and potential investment growth when it comes time to buy. After three years, first home buyers can benefit from the First Home Grant, starting at $3000 and rising to $5000 after five years of saving, with those figures doubled for qualifying couples. By leveraging KiwiSaver's benefits and incentives, aspiring homeowners may be able to accelerate their path to owning a home. For detailed guidance, resources like KiwiSaver and your first home and The basics to investing can provide valuable insights.
Finally, turning a dream of homeownership into a reality requires a combination of disciplined savings strategies, expert insights, and innovative tools that can give an additional helping hand. Be determined, set achievable goals, regularly review your progress, and embrace behavioural changes.
