A first-home deposit is not your whole buying budget

Saving a deposit is an important milestone, but using every available dollar at settlement can leave a new homeowner exposed. Split your cash plan into three parts: the purchase contribution, transaction costs and money kept back for life after moving.

Know which deposit you mean

The deposit paid under the sale and purchase agreement is not necessarily the same as the total equity contribution required by the lender. Ask your lawyer when the contractual payment is due and your adviser how the overall purchase will be funded. A difference in timing can matter even when the total funds are sufficient.

Put quotes beside the extra costs

Allow for legal work, inspections, valuation if required, moving, insurance and any rates adjustment at settlement. These amounts vary. Get relevant quotes rather than treating a generic online estimate as your final bill.

For example, a hypothetical $120,000 cash pool with $8,000 reserved for purchase costs and $12,000 kept for emergencies leaves $100,000 for the purchase contribution. This illustrates budgeting only, not a lender's deposit requirement.

Confirm where the money comes from

Keep evidence for savings, gifts and other sources. If family support is repayable, say so: it is different from an unconditional gift. Check the availability and timing of any KiwiSaver withdrawal with your provider and lawyer.

Test your plan before making an offer

• Can each payment be made on its due date?
• Are inspection costs covered even if you do not buy that property?
• Would a repair shortly after moving force new borrowing?
• Does the ongoing mortgage payment fit your household budget?

Our home loan team can discuss the financing side while your lawyer confirms the contractual payment arrangements.