Home loan deposit options

Equity is the difference between a property’s value and the amount you owe on it. If you sold your property and repaid your home loan, your equity would be the amount you have left.

Rather than having to save up the cash, you may be able to use the equity in your existing home to buy your next home, do renovations or to purchase an investment property.

For example, if you have a house worth $400,000 with a $100,000 home loan, you have $300,000 of equity in the property.

If you’ve been a KiwiSaver member for at least 3 years, you may be able to withdraw your KiwiSaver savings to help you into your first home.

If you have family who would like to help you get into your first home, you may want to explore gifting or guarantee options. They can be effective if you’re able to meet the repayments on a home loan, but don’t have the deposit you’d normally require.

Gifting is when a family member gives you some of the money for your deposit. If someone is giving you money for your deposit, we’ll need confirmation that you won’t need to repay that money. Both you and the family member(s) concerned should get independent legal advice before taking up this option.

With this option, we’ll require a Deed of Acknowledgment confirming that the loan won’t have to be repaid until the property is sold. Your family member(s) should talk to their lawyer about getting this sorted.

In some cases, we may be able to take a mortgage over a home owned by someone else, for example your parents, as extra security for your loan. Where this happens, we'll need a guarantee from the owners of that home. Under a guarantee, someone agrees that they will be responsible for some or your entire loan if you're not able to pay it for any reason.

There are a number of conditions that both you and whoever is providing the guarantee will need to meet, and you'll both need to get legal advice before taking up this option.

Some developers are now offering cash contributions to assist first-time homebuyers. We’re happy to accept these contributions as part of your deposit, under the following conditions:

• A maximum of $10,000 per applicant per binding Sale and Purchase Agreement.
• A copy of the Sale and Purchase Agreement must be held and contain the terms of the developer’s cash contribution without clawback conditions.
• Once the contract is unconditional, the cash contribution must be deposited into your solicitor’s trust account. Confirmation of receipt from your solicitor must be sent to your Banker/Home Loan Coach.

Any contributions labelled as ‘cashback’ for furniture or post-settlement costs are not eligible.