Get a Bigger Home Deposit

5 ways to accumulate a larger deposit on your first home

Owning a home is a dream many of us share, and it's usually the foundation of a solid financial plan. However, saving up for that all-important deposit can feel like an uphill battle, especially with cost-of-living pressures. But don't worry, it can still be done, plenty of Kiwi’s are buying property right now!

To purchase a property, you’ll need an all-important deposit. So, let’s explore the top ways to boost your home deposit savings and bring you one step closer to turning that dream into reality.

Discover how you can make your homeownership goals more attainable.

1. Increase Your Savings

You might be thinking increased savings is a no-brainer, but hear us out with some practical tips to get you on your way:

• Build up your savings gradually. Set up a small weekly automatic transfer into a savings account, such as $50. After that, on the first day of every month set a reminder in your calendar to increase the amount by $10. You won’t miss the extra $10 each month, but over time it will make a huge difference. By the end of year one, you’ll be saving $170 a week, or $8,840 a year. After five years, you’ll be saving $650 a week – an impressive $33,800 a year! If you reach the point when you can’t keep up the $10 increase, reduce it, but always raise your savings by at least a dollar per month.
• Plan for mortgage repayments. A different approach to above is to save the difference between your current rent and your proposed mortgage, then transfer the surplus income into a savings account. This can help you be better prepared when it comes to applying for a home loan, as well as showing potential lenders (banks) you can afford the proposed mortgage. As a bonus, it helps build your deposit while you get used to how the proposed mortgage payments will feel.
• Optimise your expenses. A careful look at your outgoings will always reveal areas that can be trimmed. Many of us are paying for things like subscriptions that we never use and may have even forgotten we’re paying for. Check your bank and credit card statements carefully for such payments then cancel them – not only can you dedicate that regular sum to savings, but the improved cashflow it provides will help you obtain, then repay a mortgage when the time comes. It’s not just subscriptions and memberships, either. Unneeded shopping trips, dining out, coffees, thoughtless purchases, and more, all add up to drain our bank accounts. Instead, spend deliberately and thoughtfully.
• Windfalls. Put any work bonuses, overtime, or other one-off windfalls straight into your home savings.

2. Increase Your Income!

Increasing your take home pay can be a challenge for many people, but it’s undeniable that increasing your income and saving the extra earnings, is the absolute best way to both increase your home deposit and better-yet increase your ability to repay a mortgage.

A Google search will give you no shortage of options to increase what you earn, with possible solutions including:

• Ask what you’d need to do to achieve a raise or promotion. You might be surprised by the response.
• If you’re still some years away from purchasing a home, then it may be worth an investment in your own skills. This investment could be in a course or certificate so you can get promoted or shift to a higher paying role. Perhaps a total change in career path is needed to bolster your earnings for the long-term?
• In addition to your current source(s) of income, such as a full-time job, take part in the “gig economy”. For example, driving for Uber or performing freelance work.
• Sell stuff online. Whatever you’re interested in, the chances are you can sell what you like online. This could also be an option if you’ve got a bunch of spare stuff in a bedroom or garage, as online auctions are a great way to save on moving costs when you do find a home, as well as generating some extra cash to bolster your deposit.
• Take on an additional job. Almost none of us are at peak capacity, and while having a second job can be a big ask, as a short-term solution it may be just enough to provide the additional sum necessary to get you into the home you want.

Remember, the key is to increase your income then dedicate the additional regular surplus to savings.

Learn more:

• ‍High income skills
• Your boss wants to give you a raise
• NZ’s best side hustles

3. Consider Assistance from Family

Clearly, this opportunity isn’t open to everybody.

Even for those fortunate enough to have family members to ask, it may be difficult to ask for family assistance.

This is often called the “bank of mum and dad”! Some have gone as far as suggesting this is one of the largest banks in the country for first home buyers.

Our mortgage brokers (advisers) have increasingly seen this, as parents help adult children enter the housing market in increasing numbers over the last decade. This can be by providing additional funds to contribute to the deposit, or by acting as guarantors to help secure lending from a bank. Sometimes, parents are simply providing an ‘inheritance in advance’ by gifting funds to children now instead of sometime in the future when the parents pass away. If this is possible, providing it earlier in the children’s lives is likely to have a greater impact than the children receiving an inheritance later in life, as it is often far more valuable to the adult children when they’re trying to get on the property ladder.

Some people move back in with their parents to save for a home and dedicate what they would have been paying in rent to the home deposit.

4. Invest More into KiwiSaver?

The most obvious way to start saving for a first-house deposit is KiwiSaver via the first home withdrawal.

If you know that buying a home is ahead of you, increasing your KiwiSaver contributions to eight or ten per cent is an option. Doing this from early-on in your career means you’ll quickly get used to saving that amount. However, KiwiSaver has several drawbacks, including:

• Strict withdrawal criteria apply. This means if your situation changes you probably won’t be able to access your own money. For example, you decide to fund yourself through medical school before buying a home, you may have a big KiwiSaver balance but little ability to pay the bills in the years before you become a high-earning doctor.
• KiwiSaver is an investment, which means over ‘short’ timeframes such as three years, we expect the balance to fluctuate. In other words, you could be worse off if you withdraw them during a market downturn.

Check Your Fund Choice

If you’re planning on using a KiwiSaver first home withdrawal to help buy a home, then ensure you’re in a suitable fund choice for your time frame and personal risk tolerance. If you want to buy in the next few years, you’ll probably want a fund that doesn’t invest mainly in growth assets – or in other words, you’ll probably want to choose a fund that’s invested conservatively. This will help protect your KiwiSaver balance from the impact of investment market fluctuations, giving you greater certainty about the home you can afford.

If your first house is five years or more away, you can afford to take a bit more risk and may be rewarded for that risk with better returns. It’d be the pleasure of one of our advisers to talk this through with you.

If you want to save money beyond what you put into KiwiSaver, you might choose to do it in another savings or investment vehicle to avoid those withdrawal restrictions. One option may be a simple managed fund.

5. Check All Mortgage Options

While this won’t help increase the size of your deposit, it will help you make the best use of it.

When it comes time to seek out a mortgage, there are several tips and tricks that our mortgage brokers (advisers) are familiar with to ensure you get the best deal possible. This could include:

• Seeking out more lending options than just your own bank. Non-bank lenders aren't restricted to the same rules as banks and can offer buyers a loan to increase their deposit with a standard bank, or a home loan for those with less than 20 per cent deposit. Non-bank lenders do come with drawbacks including (usually) higher interest rates, so this option is not for everyone.
• Repaying debts such as credit cards and reducing the limits on them will have an impact on how much you can borrow for a home. For example, a credit card limit of $10,000 could reduce the size of the loan you could obtain by up to $50,000.
• Examining different ways to structure the mortgage so you can repay it as fast as possible.

The Bottom Line: Accumulate a Bigger Home Deposit

Building a home deposit might feel like climbing a mountain, but every step — whether it’s saving more, earning extra, leaning on family support, or optimizing your KiwiSaver — is progress toward your summit. Combine these steps, stay committed, and keep your eyes on the prize.

Homeownership isn’t just a dream; it’s a goal within reach. You’ve got this — start today, and your future self will thank you!

If you’d like to learn more about this topic, look at some of the following resources:

• First home buyers
• Property investment loans
• Refinance an existing mortgage, usually to get a better deal and pay it off faster
• Refix or restructure an existing mortgage, usually to pay it off faster