Getting your first mortgage can feel overwhelming, but it doesn’t have to be. In this step by step guide, we break down everything you need to know to secure your first mortgage and get into your home sooner.
Understanding Your Deposit
Your deposit is the cornerstone of getting your first mortgage, and it can come from more than just your savings account. KiwiSaver often makes up a large portion of a first-home deposit, with many buyers using 30–40% of their total deposit from it. To withdraw KiwiSaver funds, you must have contributed for at least three years – these don’t need to be consecutive.
If you’re planning to buy soon, consider moving your KiwiSaver to a cash fund to protect it from market volatility. Personal savings are just as important, and the most successful savers set their goal first, then work backwards to determine exactly how much they need to save weekly or monthly.
Another way to boost your deposit is through the ‘Bank of Mum and Dad,’ which can include gifting, interest-free loans, or using their property equity as security.
How Much Deposit Do You Really Need?
Contrary to popular belief, you don’t always need a 20% deposit to get your first mortgage. Specialist loans allow some buyers to purchase with as little as 5% deposit, but these have strict income caps and eligibility criteria.
Whether you should buy earlier with a smaller deposit or wait until you’ve saved more depends on your circumstances and the market. In many cases, getting on the property ladder sooner means you can benefit from potential house price growth rather than chasing a moving target.
Why Use a Mortgage Broker?
While banks can approve loans directly, mortgage brokers offer access to a wider range of lenders and can match your situation with the right bank. They also understand each bank’s appetite for certain deals and property types, which can make the difference between an approval and a decline.
For first-home buyers, brokers are typically paid by the bank, meaning you usually won’t have to pay for their services.
What You’ll Need for Approval
Banks focus on three main factors: your income, your expenses, and your deposit. Be prepared to provide payslips, bank statements, and credit card statements covering the past three months.
While regulations are stricter than they were a few years ago, most expense scrutiny is about ensuring you can comfortably manage repayments.
Pre-Approval and the Home Buying Process
A pre-approval typically lasts 90 days and can often be renewed for another 90 days. It’s not a guarantee, as the bank will still need to approve the specific property you buy, ensuring it’s insurable and not a risky purchase.
One of the most rewarding moments for brokers is telling clients they’re ready to buy sooner than they thought – sometimes even right away.
Key Takeaways
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KiwiSaver can form a large part of your first-home deposit, but you must contribute for at least three years before withdrawing.
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Move KiwiSaver funds to a cash fund if buying soon to avoid market dips impacting your deposit.
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Specialist loans may allow you to buy with as little as 5% deposit, subject to income caps and eligibility.
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Mortgage brokers can access more lenders and match your situation to the right bank.
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Be prepared to provide documentation proving your income, expenses, and deposit.
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Pre-approvals last around 90 days and can be renewed once, but the property must still be approved.
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Getting on the property ladder sooner can help you benefit from house price growth.
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Parental help can come in the form of gifts, interest-free loans, or equity.
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Banks assess affordability based on current expenses, but adjustments are possible before reapplying.
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The property you choose must be insurable and meet the bank’s lending criteria.
Next Steps:
Ready to find out if you could buy your first home with as little as a 5% deposit? Get in touch with Lighthouse Financial’s mortgage team today.
If you’d like to learn more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
