3 January 2019
Saving for your first home deposit: Small steps make big change
Owning your own home is the great Kiwi dream. This year the Government took steps to protect this dream for more New Zealanders, by passing a law that makes it more difficult for foreign investors to buy on our shores. Although it can still be tough to turn this dream into a reality, one of the first things you need to do is start saving for a deposit. But does this mean saying goodbye to your social life, or is it possible to have your smashed avo on toast and eat it too?
“How much do I need to save?” is one of the most frequently asked questions we get from first home buyers. Well, that depends on your budget and how much you can afford in terms of mortgage repayments. Our advice is rather than focus on how much you need to save, just get started! The longer you wait, the further away your dream of owning a home becomes.
As the age-old saying goes “a penny saved is a penny earned”. Your savings are just as valuable as your earnings, even though it can be difficult to appreciate this at the time!
Here are some first steps to get started:
- Look at your existing savings and your income and establish how much you could be saving each week.
- Set realistic savings targets. Remember that unexpected costs always come up, and you still want to enjoy life. Set budgets that fit your lifestyle while ensuring you’re putting something away each week.
- Book an appointment to talk to a mortgage advisor at your bank or a mortgage broker. They can help you determine how much you can borrow for a mortgage so you’re clearer on what you need to save.
- Get some help from the internet. There’s plenty of budgeting apps available which can help you track your daily and weekly spending, and mortgage calculators to give you an idea of your deposit and payments.
- If you’re buying with a partner, share your goals so you can hold each other accountable.
Here are just some of the useful savings calculators and budgeting apps available online:
- Pocketbook budgeting app
- Sorted budgeting tool
- Interest.co.nz deposit calculator
- Mortgage calculators – check your bank’s website; most major banks have one online. Here is Kiwibank’s, for example
Managing your expectations from the very beginning is one of the most important things to do, and also one of the hardest. Yet being clear on what you’d like to spend on a home you can comfortably afford will set you up nicely for a pleasant journey into home ownership.
For more tips on key things you need to consider as you embark on this exciting journey, download the Lugtons Guide for first home buyers.