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.
Not sure if you've got enough deposit? Get the low-deposit guide to see what options you have.
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 in our First Home Buyers Guide or in our Low Deposit 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 6.00%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.
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What is a mortgage cash back?
These days, mortgage cash backs are the big incentive banks use to entice new home loan customers. While the prospect of all that free money back in the bank is pretty tempting stuff, it's important to make sure you're across all the T&Cs.
Everything first home buyers need to know about KiwiSaver
Most New Zealanders know about KiwiSaver, but not everyone knows how it can benefit you as a potential home buyer, or how the process works when you want to use it.
Don’t just take our word for it
Ashley Paice
New Zealand
Great experience and very happy with the service.
Jonny
New Zealand
Mayank has been great to deal with. Our mortgage is floating for the first few days and then we will fix next week since there's been an OCR cut. Mayank was really good at explaining things especially the option of setting up part of the mortgage with a revolving credit.
Anonymous
New Zealand
Excellent
Peter
New Zealand
Shiva was amazing, this process was so so simple, so much better than direct with the bank. Thanks