So you want to... buy your first home?

Last updated 25 July 2022

Buying a home can be a daunting prospect. Whatever your age, it feels like something your parents should be doing, not you.

But if buying a house is at the top of your to-do list, finally getting there will feel like a huge accomplishment. With the right tips and tricks, getting your foot on the bricks and mortar ladder needn’t be that hard at all.

1. Know your budget

A home is one of the biggest purchases you’ll ever make, but a bit of research and planning will make the process less daunting. If you’re serious about buying your first home, a great first step is to chat to a mortgage broker or bank about how much you might be able to borrow. In an initial conversation, they’ll ask for some financial information from you and anyone you’re buying a property with. This will include things like your income, living costs, and any kind of debt you have, so come prepared with those numbers. 

If you have other debts, like credit cards or car loans, this can affect how much you’re able to borrow. To get your debts under control, read about how to get debt-free and take the Money Talks debt challenge in our Āki Wellbeing Hub for MAS Members. Your credit score could also affect the size of your mortgage, so make sure you’re also keeping up with your bills.

2. Use KiwiSaver to help buy your first home

There are a few ways your KiwiSaver account can help get you into your first home. Once you have been a member of a KiwiSaver scheme for three years, you’re allowed to withdraw your balance and put it towards buying your first home. You have to leave at least $1,000 in your account, as well as any money transferred from an Australian super scheme. 

You can’t use your KiwiSaver account to buy an investment property – you must intend to actually live in the property. However, given this is your first home, this probably isn’t an issue for you.

It’s also important to consider what type of KiwiSaver scheme fund you’re invested in. If you’re planning to buy a house within the next few years, it could be sensible to choose a more conservative fund. This type of fund offers lower expected returns than a growth fund, but it can help protect your deposit from potential ups and downs in the market in the years leading up to your purchase. Your choice of fund may also depend on your tolerance for risk. So, understand your investment risk profile and check out our guide to using KiwiSaver to buy your first home.

3. Sorting your home deposit

The minimum amount a typical lender will accept for a first home deposit varies between 10% to 20%. If you can, save more than the bare minimum – the more you put down as a deposit, the less you’ll pay in mortgage repayments and interest.

There are also programmes that could help support your first home purchase. These include:

• First Home Grant: After three years of regularly contributing to a KiwiSaver scheme you may be entitled to a First Home grant. This type of grant gives you $1,000 for every year you contribute to your KiwiSaver account, capped at $5,000 if you’re buying an existing home, or $2,000 for every year if it’s a new build or off-plan home, capped at $10,000. There are a few hoops to jump through to ensure you’re eligible, including income and property value caps – Kainga Ora has more information about the First Home Grant. 
• First Home Loan: If you only have a 5% deposit, you may qualify for a First Home Loan, which is a loan for your first home issued by selected banks and underwritten by Kainga Ora. Your lender has to be participating in the First Home Loan scheme and there are some other eligibility criteria that you need to meet, including bank lending criteria and income caps. Find out more about the First Home Loan scheme. 

Borrowing or being gifted money from the ‘bank of mum and dad’ is also an increasingly popular option for people buying their first home. If you’re in this camp, make sure you sit down and document everything. Everyone involved should be clear about whether the money is a gift or a loan, and any repayment conditions attached to it. OneRoof has a great guide to borrowing money from your parents for your first home purchase. 

4. The extra fees

A lot of people forget that the price of the house isn’t the only cost involved in buying a home – there’s a pretty long list of extras you need to consider. Here’s a quick breakdown:

• Legal fees: Before signing any paperwork, you should have a lawyer look over it and check that all the required conditions are included in your agreement and you haven’t missed anything important. You’ll also need a lawyer or conveyancing professional for settlement. Shop around as lawyer fees vary.
• Building reports: You should consider getting an experienced builder to review the home to identify any potential issues before you go unconditional on your purchase. This could save you thousands in the long run.
• Rates: When you become a homeowner, you also become a ratepayer. Rates can be thousands of dollars each year, so ask your real estate agent how much you’ll be paying, or check on the local council website.
• Body corporate fees: If your first home is an apartment or townhouse, you’ll need to pay these fees to cover the maintenance and insurance of shared areas like a gym, pool or driveway. These catch a lot of people out so be aware.
• Low equity costs: if your deposit is less than 20%, there might be additional costs associated with this, such as a slightly higher interest rate. 

The extra costs of buying a house can quickly add up, so make sure you’re prepared for them.

5. Actually moving in

You’ve done it – you’ve saved up enough to start the buying process. But, have you thought about putting aside some extra money for moving costs? 

It’s important to remember that there will be a list of costly things to do in the weeks leading up to moving day. This could include urgent renovations like electrical work to make your new home safe to live in, setting up power and internet accounts, securing your house insurance and contents insurance or shelling out for professional movers or painters.

With your move on the horizon, you should also make sure your contents are insured while in transit or storage. MAS contents insurance will cover your stuff if it’s lost or damaged accidentally while being moved to your new address, or while it’s in a professional storage facility.

If you’re ready to buy your first home, find out more about MAS house insurance.