What are the deposit requirements for a mortgage?
Basically, banks won't lend the full amount for a house - you need to be able to put down a deposit, and the more the better. The good news is there are lots of ways of pulling together a full deposit, and help is available. Read on to find out everything you need to know.
Gather up your acorns
You might be familiar with 20% as the amount you need to fork out, but the reality is if you're in a strong financial position we can work with as little as 5% deposit.
Most people will need around 10% deposit, and if you can cough up a whopping 20%, you'll access the banks' most competitive rates and avoid low equity fees.
If you've got high income but low deposit, you could be eligible for Launchpad, Squirrel's own home loan product for first home buyers that allows buyers to get into home ownership with as little as 5% deposit. Find out if you're eligible.
Still got more saving to do? Grow your savings faster using our high-interest On-Call Account.
KiwiSaver
If you're a first home buyer you can withdraw KiwiSaver contributions made by you and your employer to use as a deposit towards your new home if you meet these conditions:
- have been a KiwiSaver scheme member for at least three years;
- be planning to live in the house for at least six months, and
- be buying your first home.
You can find out more about other options with Kāinga Ora in our First Home Buyers Guide. Some of these options come with income restrictions, though — so what if you earn above the price caps? You might be eligible for Launchpad.
Launchpad
With Launchpad, a home loan product created by Squirrel, if you've got high income you could buy your first home with as little as 5% deposit and shoot into home ownership faster. We’ve tailored this towards those of you who don’t quite fit in the banks’ box or the Kainga Ora scheme, haven’t got access to the ‘bank of parents’ but are able to afford the mortgage.
- Buy with as little as 5% deposit*
- No property valuations required for most properties (this allows you to go to auction without draining your savings)
- Competitive interest rates
- Best of all, it’s a leg up onto the property ladder
Find out more about Launchpad and see if you're eligible.
* Lending criteria and t's and c's apply.
The Bank of mum and dad
The easiest and cheapest way to buy is using your parents to guarantee that part of your 20% deposit you don’t have.
Their guaranteed portion will be secured over their property or it can be secured over a term deposit, so you're not asking them to fork out cash, it's more like putting a 'hold' on their existing equity until you've paid that portion back.
In the event they use a term deposit as security, the term deposit stays in your parent’s name and they continue to earn interest on it. Guaranteed home loans are treated the same as loans under 80% so you get great interest rates, there are no fees, and you’ll even get a cash contribution from the bank. On an average loan size of $400,000 you will save around $10,000 using this option. Using a guarantor makes strong financial sense, even if you can go it alone. Just keep in mind that you'll still need to be able to prove that you can afford the entire loan, including the portion that your parents are guaranteeing.
Eligibility for acting as a guarantor
Your parents need to be in a stable financial situation and still working (so ideally not retired on a sailboat, spending your inheritance).
If they want to know more about what they're signing up to and any potential risks, we're happy to chat! Just call us on 0800 21 22 30.
Still got more saving to do?
Saving a deposit is tough. But every bit helps! We've got saving and investing options to grow your money faster.
You can earn interest rates over 7%p.a. by investing with Squirrel's p2p platform, or if you've got less appetite for risk you can simply deposit into our high-interest On-Call Account that will earn you some great returns whilst it simply sits there, no strings attached.
Save & invest with Squirrel
With great returns and the option to have your money on call, find the saving and investing option to suit you.
Keep up to date because things change all the time
We keep an eye on what help is available for first home buyers and update our blog with anything newsworthy, so you've always got the latest information to work with.
How saving with Squirrel could get you into your first home faster
If you've been working hard to get to that 20% house deposit, you'll want to make sure your savings are working as hard as possible, to get you into your first home even faster.
First home buyers: Ways to get into your own home with just a 5% deposit
Lenders will usually require you to front up with a deposit of 20% of the purchase price for an existing property – 10% if it’s a new build – before they’ll consider giving you a mortgage on it. If you’ve been saving hard only to have your deposit goal feel like it’s getting further out of reach – or you just don’t want to have to wait years and years (and years) to get into your first home – there are options out there.
A Squirrel case study: Charlie & Kyle
In this case study, we sat down with Auckland first home buyer, Charlie, to chat about her (and partner Kyle's) journey to home ownership with us.
Don’t just take our word for it
Victoria
New Zealand
Outstanding guidance and service from Adam. I don't know why someone wouldn't use Squirrel. Accessible responsive knowledgeable understanding of our situation and goals and making it all so easy, we were so grateful to work with Adam and Squirrel and recommend the them both without hesitation!
Luke Murray
New Zealand
It was a great experience. The refinance helped me greatly and put me in a position to keep my apartment
Christa
New Zealand
A huge thank you to my advisor, Kat. She worked so hard to get a mortgage offer for me. She admitted that as I did not tick all of the boxes, she would have to present my case differently. I'm so grateful that she didn't give up on me, as other mortgage brokers had. She is so hard working, clever, lovely and friendly. I would recommend Kat to anyone looking to purchase a house.
Mark Karen
New Zealand
We've used Squirrel investment and mortgage services. On the investment front, we found it easy to use and the interest rates were excellent, selling our investments was easy when we needed to as well. Mortgage services were great too - Emma listened to what we needed, and our circumstances and got us a fantastic deal. The process was smooth from start to finish, with excellent communication and advice along the way.