How to get closer to buying your first home

Our friends at The Cooperative Bank have provided the content on this page. receives no financial benefit in publishing this content, it has been shared to help our readers learn more about the lender products and services available to them.

The Co-operative Bank is proud to have helped more than 370 customers get the keys to their first homes over the past year.

While getting onto the property ladder might feel like a far-off dream for many New Zealanders, first home buyers made up 30% of new home loans drawn down by customers of The Co-operative Bank in the past 12 months.

So, to support more New Zealanders to bring their home-ownership dreams closer to reality this year, we’ve put together some helpful tips.

If you’re wondering whether – or how – you could buy your first home, here are some good places to start:

1 - Understand how buying a house fits with your other life goals

Life goals can have an impact on a big decision like buying a house. They could influence the timing of your purchase, where you should buy, and what you’re looking for in a first home. You don’t have to have it all figured out, but it is worth thinking about what your life may look like in the next 10 years:

  • Your career: Are you planning to stay in your current role or industry or is a big change on the horizon? Will you have a stable income to make your mortgage repayments?
  • Where do you see yourself living? The suburbs, the city, or a rural area?
  • Who will you be living with? Is starting a family on the cards anytime soon and if so, what impact could this have on your mortgage repayments or the size of home you’ll need?
  • What other pricey items could pop up during this stage of your life? Maybe it’s a bigger car for the family, or expensive education costs.

These factors, combined with your current savings and financial situation, will play a big part in the timing of any first home purchase. Regardless of whether you decide to buy in the next year, or in a couple of years’ time, putting in place financial goals and working towards them will get you started.

2 - Know your finances

Get to know your finances more deeply by asking yourself some key questions: How much money do you have in savings? How much do you need for a deposit? What does your current budget look like? How will your life and spending change when you have regular home loan payments to make? What new costs will you need to think about, such as rates and insurance? Is there anything you’re currently spending money on that could go towards a savings goal instead?

As a first-time home buyer, you usually need between 10 to 20 percent of the sale price of the house for a deposit. But you don’t necessarily need to have all that money saved in a bank account.

Find out if you are eligible for the KiwiSaver first home withdrawal. Many first home buyers can withdraw funds from their KiwiSaver to use towards their deposit.

Some people might also be able to lower their initial deposit from 10 or 20 percent down to 5 percent through The Kāinga Ora First Home Loan scheme. These First Home Loans are underwritten by Kāinga Ora, allowing the bank or lender to issue a home loan that might otherwise not meet lending criteria. Check out the eligibility criteria, and importantly find out whether your bank offers Kāinga Ora First Home Loans, like The Co-operative Bank does.

While you’re there, you may also want to check if you are eligible for $10,000 towards your first home through The Kāinga Ora First Home Grant, for additional support.

3 - Set a savings goal

Once you know what your financial position is and how much your deposit is likely to be, you can start setting a savings goal and some realistic timeframes.

Setting a savings goal is a great first step – for example save $XXXX in the next 6 months or put XX percent of your pay aside every month towards a deposit.

If your savings capacity seems a long way off your goal amount – and you know you want to use the savings for a house – consider putting the amount you currently have in a Term Deposit or a high interest savings account to generate additional interest while you continue to save up. It could be a good time to invest in term deposits – with rates like 6.15% for six-month term deposits at The Co-operative Bank (at the time of publishing this article).

4 - Start a conversation with your bank

Reach out early to your bank. They can give you help around setting your goals, budgeting, and the process of buying a home.

At The Co-operative Bank, we have a range of home loan options – including fixed, floating and revolving credit. You could mix and match to get a lending structure that works best for you.

We also have a team of specialist lenders who take the time to get to know our customers, assist them through the process, and help them achieve their goals.

We recognise that even though it’s our day job to provide home loans, this is a major life milestone for you. It can be reassuring to know you can talk with a specialist lender when you have a question – all the way from deciding to buy your first home, to moving in, and beyond.

Buying a first home is an exciting and big step. It’s important to set realistic and achievable goals and work towards them. The Co-operative Bank is committed to helping New Zealanders bank better.

Jon Armour

Jon is Chief Product Officer at The Co-operative Bank – which is committed to helping New Zealanders bank better. Jon’s role is to ensure The Co-operative Bank’s customers have the best banking products available.
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DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute a financial advice service. The article is only intended to provide education about the New Zealand mortgages and home loans sector. Nothing in this article constitutes a recommendation that any strategy, loan type or mortgage-related service is suitable for any specific person. We cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you. Before making financial decisions, we highly recommend you seek professional advice from someone who is authorised to provide financial advice.

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