Does This Sound Like You?
Many first home buyers struggle with deposits.
You know that you can afford the repayments and often they look lower than what you are paying in rent. Buying a home seems like an obvious thing to do except the banks require a larger deposit than what you have.
The banks want a 20% deposit, but you hear that you can buy a home with even a 10% deposit.
But with the house prices like they are even saving a 10% deposit is a struggle. As you are busy saving the house prices keep going up even faster than you can save, and it looks like buying your own home is getting out of reach.
Getting The Deposit You Need
So the ideal is to have a 20% deposit; however for your first house that may not be possible.
Most first home buyers will not be able to save 20% for a deposit, especially when they are buying in one of the major cities where house prices are generally more expensive.
But you need to get as much deposit as you can.
KiwiSaver – you should have your KiwiSaver which you can use towards your deposit.
First Home Grants – if you meet the criteria and the house is within the price cap then you can look at accessing a First Home Grant.
Your Savings – if you are serious about buying a first home then you should have some savings too.
Family – can often help with a gift or loan, or making their equity available.
These are the most common ways that first home buyers get their deposits.
If you are very serious about getting your first home you may also consider some other ways to get your deposit.
Second Mortgages – some of the non-bank lenders allow you to get a second mortgage to help with your deposit. While a second mortgage is more expensive they do gove you the opportunity to buy a home without waiting and watching the prices continue to rise.
Co-Ownership – instead of a second mortgage we are now seeing more people take advantage of the co-ownership model that acts in a similar way to a second mortgage. The idea of co-ownership is not something that many banks or mortgage brokers would consider, but when you understand how they work you will realise that they can be a good way of getting into your first home.
Make The Break To Home Ownership
Sometime you have to step away from the “normal” if you want to get ahead.
It may seem more expensive if you have a a lower deposit as non-bank lenders, second mortgages a co-ownership are going to cost you more than a standard home loan with a bank; however it if often still a lot lower cost than if your were to wait.
It’s common to hear people say “if only I had purchased last year or two years ago” yet very few people will ever comment that they wished they had waited.
Know what your options are to get a smarter start with home ownership.