Deposits are biggest challenge for today's first-home buyers

First Home buyers

Posted 19 months ago by Craig Pope

How did your parents, or your grandparents, buy their first home? It’s an interesting question to ask, particularly if you’re trying to get a foot on the property ladder. Every generation has its challenges when it comes to buying a first home—for today’s buyers, saving a deposit big enough to secure a home loan can take a lot of work.

The Real Estate Institute of NZ recently revealed it takes around 159 weeks for a Wellington household to save an $82,000 deposit for a home worth around $410,000. In order to save this amount, they calculated the average weekly household income of $2178 would leave a surplus of $516 every week.

Saving is great, but it often takes a bit extra to get there. More first-home buyers are using their KiwiSaver to get across the line. Westpac recently surveyed more than 1000 KiwiSaver members from different schemes and found 74% of those aged 18 to 24 said their main reason for belonging was to save for a first-home deposit.

At Pope & Co. we find around two thirds of our first-home buyers rely on KiwiSaver to get their foot in the door. Returning from travel, or paying down debt, can leave savings low. Around 30% of parents are also gifting funds—on average between $5,000 and $10,000 to top up deposits. These ‘gifts’ can make all the difference, particularly in a competitive market—on a 90% home loan this can provide another $50-100k budget if the numbers stack up.

Parents can also help in many other ways, including:

  • Acting as a guarantor: Parents can offer their properties as security against your loans. We advise getting robust legal advice before doing this and imposing a limit.
  • Offset mortgage product: This is where you can offset your mortgage against a parent’s term deposit—the mortgage interest rate is reduced in return for less interest paid on the term deposit.
  • Loan: Some parents offer interest-free loans to children, on the understanding that it will be paid back on the sale of the property. Usually called an Acknowledgement of Debt. 


There are many ways to get your first-home deposit, our friendly team have been first-home buyers themselves and can give you expert advice—we are more than happy to advise you on the best step forward. Give us a call today on 0800 000 517.

Hey, it seems you"re using a browser that is a little past its time and our website might not be able to perform as it should. If you’d like to have the best experience on our website, you can easily find out about updating your browser here

dismiss this message