Don’t worry, you’re not alone. It will take time, but there is no reason why you can’t put yourself in a strong enough position to be considered for a mortgage. Ideally you would be looking to build up your deposit at the same time as becoming debt free, strengthening your overall position. These are the steps that we recommend you take, and you can tackle them all at the same time!

1 Eliminate debt. FirstHome.Kiwi has an entire section dedicated to getting rid of debt, and you can find it here in our Debt! page. It contains lots of information and links etc, all designed to help you pay off all those car loans, credit cards, student loans etc that are soaking up large chunks of your income.

A big part of this process is knowing your credit score. If your credit is, to put it politely, rubbish, the good news is you have plenty of time to rectify it.

Equifax, https://www.equifax.co.nz/personal can provide you with your credit report free of charge. Grab it, pay off any outstanding debts that are listed and keep on top of your credit score by requesting your report at least once a year.

Once your debts are paid off, the money that was previously used to pay debt can then be re-directed into either a separate bank account or into your KiwiSaver, whichever works for you. It all helps build the deposit.

2 Do your numbers. It’s important to understand where you are financially right now, as far as the lenders are concerned. Our calculators page will help you work out how much (in theory) you could borrow today, and also how likely the banks would be to lend to you in your current situation. By having a play with the numbers you will get an idea as to what is possible once you have your debt under control and a deposit saved.

3 Build your deposit. Here in Aotearoa we are lucky enough to have KiwiSaver, which once you’ve been in it for three years will allow you to withdraw all your KiwiSaver savings (except for the first $1000) as part of the deposit on your first home. For most first home buyers without major savings or inheritance, KiwiSaver will form the bulk of your deposit.

If you have debt, while paying it off we recommend contributing the minimum 3% of your wages into KiwiSaver. This ensures you also get both the employer contribution and the annual $521.43 Government contribution. You can of course contribute more, however in most cases any extra cash is better off paying outstanding debt. Having little or no debt is just as important (if not more so) to a potential mortgage lender than a sizable deposit.

4 Build your Brains Trust. Even in the early stages of saving for a home, there is no reason why you can’t start building a team of experts around you, and start “schooling up” on house prices, interest rates, mortgage options etc.

We recommend talking to your KiwiSaver provider asap to ensure that your KiwiSaver account is set up to maximise all your entitlements. This includes Government and employer contributions, as well as ensuring you are in the best fund type for the time frame you have in mind before buying a home.

When you feel you are making some real progress, it wouldn’t hurt to make contact with a mortgage broker who can start guiding you through the pointy end of applying for a home loan. Even if you think it might be a few years before you are ready to apply, getting a good broker onside early will give you a great feeling of having some control.

If this is you and you are serious about owning a home in the future then you have one focus. Set up a debt reduction plan and stick to it until you are debt free.

The Debt! section in this website has loads of tools and tricks to help you do just that. It will take discipline, but if you take action now then you may be debt free earlier than you thought possible.

Here are some other steps you can take while paying off your debts, as part of your first home strategy…..

Build up your Brains Trust. With a growing deposit saved and a debt reduction scheme in place, it’s a good time to start talking with a mortgage broker to see what’s actually possible. A good broker will tell you straight where you are at mortgage-wise, and will be a valuable ally as you get closer to a home loan.

If you have KiwiSaver, keep contributing. This will ensure you keep getting your employer and / or Government contributions, which all count towards the deposit. Also, if a large portion of your deposit is in your KiwiSaver account, then make sure you know which fund type your money is invested in. Generally, the closer you are to getting a mortgage, the more conservatively you want your savings invested (that means more money in cash / term deposits and less in the sharemarkets). If you are looking for advice on fund types then your KiwiSaver provider should be able to help you, otherwise we recommend contacting Generate KiwiSaver who can offer useful general advice on the subject.

Again, well done. The hard part (paying off debt) is already over and it’s all about moving forward. Here are the steps we recommend for anyone in this position…..

1 Stay out of debt. Pretty obvious, and as you’re debt free in the first place it is hopefully also pretty simple. Mortgage lenders love clients who’ve proven they can live within their means, as it reduces their risk significantly.

Just to give yourself some extra peace of mind, it is worth applying for your (free) credit report to make 100% sure there are no outstanding debts that have fallen through the cracks. One of the credit agencies we recommend is Equifax https://www.equifax.co.nz/personal , who will supply you with your up to date credit score along with your historic data.

If you do find some random bill that you forgot all about, take care of it immediately. It will still show on your credit report for a few years, but you can have the report amended to show that the debt has been paid.

2 Keep building that deposit. Again, hardly rocket science, but now you can start working out how much deposit you could have by your goal buy date. If you have a KiwiSaver account, your provider should be able to help you calculate how much you could withdraw for the deposit. You can look at the difference a higher contribution rate could make, as well as potential returns by choosing different fund types (just be careful not to go too aggressive if you only have 1 – 5 years before the deposit withdrawal).

It would also pay to investigate the deposit / home ownership options available to you through both Kainga Ora and KiwiBuild. The links to both can be found in our Directory page – it may be that one of their initiatives could get you into a home earlier than you thought possible.

3 Build up your Brains Trust. Make sure you have that team of experts around you, starting with your KiwiSaver provider and bank and / or mortgage broker. These people can help you streamline your pathway and fill any knowledge gaps in the home buying process.

4 Crunch some numbers. Now is a good time to get some clarity regarding how much you could actually borrow, what your repayments are likely to be and even how likely you are to get lending if you were to apply today. The Calculators page has everything you need to do this.

5 Start researching homes! You’ve probably already got an idea on where you would like to live, so school yourself up on house prices, mortgage rates etc to stay on top of the market. Find yourself a good real estate agent, and make sure you are on their buyer’s database. At some point an opportunity will arise that you will be in a good position to take advantage of.

You have put yourself into a good position regarding securing a mortgage, and now is about strengthening your position even further. Here are our recommendations to do just that….

Pay off the rest of your debt. If you already have a debt reduction strategy in place, then fantastic. Keep going. If not, FirstHome.Kiwi has an entire section dedicated to getting rid of debt, and you can find it here in our Debt! page. It contains lots of information and links etc, all designed to help you become debt free faster.

As part of your debt reduction plan it’s important to know your credit score. Equifax https://www.equifax.co.nz/personal can provide you with your credit report free of charge. Grab it, pay off any outstanding debts that may have slipped past you, and keep on top of your credit score by requesting your report at least once a year.

Keep building your deposit. Nobody has ever said “Gee, I have way too big a deposit for my first home!” Once you’ve paid off the remainder of your debts, spare income can now be re-directed into your savings. The more you have for a deposit the stronger your negotiating position when it comes to securing a good mortgage rate.

If you intend to use your KiwiSaver funds for part (or most) of the deposit, keep contributing even if you have a debt reduction scheme in place. This will ensure you keep receiving the employer and Government contributions also.

Build your Brains Trust. Now is a great time to start building a team of experts around you to aid in the buying process.
We recommend talking to your KiwiSaver provider asap to learn about the process involved in a First Home withdrawal. You also want to ensure you are in the best fund type for the time frame you have in mind before buying a home.

If you haven’t already, now is also the time to make contact with a mortgage broker who can start guiding you through the pointy end of applying for a home loan. And find yourself a good real estate agent in the area you are looking at buying. Get on their mailing list to keep an eye out for any opportunities that may present themselves.

It would also pay to investigate the deposit / home ownership options available to you through both Kainga Ora and KiwiBuild. The links to both can be found in our Directory page – it may be that one of their initiatives could get you into a home earlier than you thought possible.

If you are at this point, fantastic. You may only be a few months away from purchasing a home, and no doubt you are already keeping an eye on both interest rates and house prices in your preferred area. The advice below isn’t rocket science, but will help you ensure you have all your ducks in a row when the time is right to buy.

Safeguard your deposit. If you have a significant portion of your deposit in shares, it would be prudent to consider transferring the funds into cash and / or term deposits. The reason for this is to reduce exposure to short term volatility that is inherent in sharemarkets. Your #1 priority is not to try and turbo-charge your valuable deposit, but to preserve it.

Double check your credit rating. The last thing you want when applying for a mortgage is to find out that you have “skeletons” in your credit history. Make sure you get a copy of your credit report BEFORE seeking a mortgage, so you can pro-actively deal with any issues that may be on the report. Equifax https://www.equifax.co.nz/personal can provide you with your credit report free of charge.

Build your Brains Trust. Being potentially just a few months (or even earlier) away from buying a home, it’s important to build up your team of professionals who can take you through the whole process. A list of people you’ll need can be found below, but the first people we recommend getting on board are a good mortgage broker and a real estate agent who specialises in your preferred area. A mortgage broker is your go-to when it comes to making sense of the whole buying process, and the real estate agent will keep you informed on the latest listings.

If a portion of your deposit is in KiwiSaver, we recommend talking to your provider asap to ensure that your money is in the best fund type for the home buying time frame you have in mind. They can also explain how to withdraw your KiwiSaver funds, so you know exactly what is required including paperwork and how much time to allow for processing.

It would also pay to investigate the deposit / home ownership options available to you, such as Shared Equity schemes or Kainga Ora’s various offerings. The links to both can be found in our Directory page – regardless of how big your deposit is, it’s always worthwhile checking out what’s possible.

For most first home buyers KiwiSaver will form the bulk of the deposit. It’s important that your KiwiSaver account is set up to help reach your desired deposit as fast as possible, but without taking too many short term investment risks. You also want to understand how the withdrawal process works, so you don’t find yourself in a panic when the sale goes unconditional in three days and your KiwiSaver funds haven’t been released.

If you are fully on top of your KiwiSaver account, fantastic. Fully on top means you know what fund type you are in, how all the contributions work, what your own contributions are and how soon you can reach your desired deposit.

BUT – if you have no idea about your KiwiSaver account, or have any questions at all regarding how it is set up, we recommend either talking with your own provider or getting some expert advice. FirstHome.Kiwi recommends talking to the team at Generate KiwiSaver, who can work with you to set up your account properly. Not just for saving a house deposit, but also once you’ve got your home and are looking towards retirement. Saving for a home and saving for retirement using KiwiSaver requires two separate strategies – a good KiwiSaver provider can take you through both in language that is easy to understand.

If you’d like to talk with the Generate team, just click here to arrange a no cost, no obligation discussion with one of their advisers.

A mortgage broker acts as a go-between between the mortgage lender (banks and “second tier” lenders), and the borrower (that’s you). In essence, they take a lot of the hard work out of getting a mortgage, as they typically deal with multiple lenders at once, negotiating on your behalf.

Why is it important to find a good mortgage broker before you find a house?
Because brokers deal with lenders every day, they know exactly what the lenders will require from you when the time comes. So they can look at your situation now, and point out what aspects you will need to work on to not only secure a mortgage, but also to get the best deal you possibly can.

If you have a mortgage broker that you know and trust, great. If not, FirstHome.Kiwi recommends the team at Vega, who are friendly, knowledgeable and offer a free brokerage service. They are nationwide so no doubt will have someone close to you.

If you’d like to talk with the Vega team, just click here to arrange a no cost, no obligation discussion with one of their advisers.