Using KiwiSaver to Fast-Track Your First Home Purchase

Purchasing your own home in New Zealand has always been part of the Kiwi dream. Although achieving this goal has become more challenging in recent years, it is still possible if the right strategies are implemented along the way.

KiwiSaver is a great tool to assist prospective buyers in getting the deposit they require to purchase their first home. It assists investors with access to leading fund managers and creates a disciplined approach as contributions are automatically taken from your salary and locked up until your purchase.

Inch by inch, play by play….

It can feel like an impossible goal to save for your first home deposit, with average house prices in New Zealand currently sitting around $930,000. A hefty 20% deposit would require $186,000 in savings. Starting from $0 and looking up, this goal may seem impossible.

Savings are not developed from one-off lump sums, they grow from small, consistent contributions over time. Slowly but surely your funds will reach a significant size. This is why KiwiSaver is structured to receive regular employee and employer contributions every pay cycle.

If your main goal is to purchase a home, the best thing you can do is consistently contribute as much as you can to your KiwiSaver. By increasing your contribution to 6%, 8% or 10% of your salary, you can speed up the process significantly.

Case study

Sally and Tom are a couple earning a combined income of $160,000 per year ($80k each). Based on the below contribution rates, the couple would reach their savings goal of $186,000 in the below timeframes (3% employer contribution).

3% contribution > 12 years
4% contribution > 11 years
6% contribution > 9 years
8% contribution > 8 years
10% contribution > 7 years

Increasing their contributions to 10% allowed the couple to achieve their goal 5 years ahead of schedule compared to the minimum. Using KiwiSaver to save for your first home eases the pressure, ensuring savings are automatically set aside with every pay check.

It is also important to keep in mind you can regularly amend your contribution rate, it is not a decision that needs to feel like it is fixed. Speak to your employer about increasing your contribution rate, if money is a little tight down the track you can always reduce it back to 3%.