Saving $100,000 for a house deposit is a significant milestone, but whether it’s “enough” depends on your goals and the type of property you want to purchase. In New Zealand’s housing market, $100K can give you different options depending on whether you’re buying an existing home, a new build, or leveraging equity in an existing property. Let’s explore these options in detail.
Option 1: Buying an Existing Lower-Value Home
If you’re looking to get on the property ladder as soon as possible, using your $100K cash deposit to buy an existing lower-value home could be a practical choice. The minimum deposit requirement for existing homes is typically around 20% of the property’s value. This means your $100K deposit could enable you to purchase a home worth up to $500,000, depending on your lending approval.
While existing homes in this price range are often older and may require some maintenance, they can be a great starting point, especially for first-time buyers. You might find smaller homes, apartments, or houses in regional areas where property prices are more affordable. This approach allows you to own a property sooner while keeping your total mortgage manageable.
Option 2: Investing in a Higher-Value New Build
If you’re open to buying a newly constructed property, your $100K deposit can stretch further thanks to New Zealand’s special lending rules for new builds. Banks often require only a 10% deposit for new builds, compared to 20% for existing homes. This means your $100K deposit could enable you to purchase a new property worth up to $1 million.
New builds often come with modern designs, better energy efficiency, and lower maintenance costs, making them an attractive option for many buyers. Additionally, buying a new build could provide potential benefits like greater resale value in the long term. However, keep in mind that new builds in this price range are often located in suburban developments, so consider whether the location suits your lifestyle and commute.
Option 3: Combining Your $100K Deposit with Home Equity
If you already own property, you can use your $100K cash deposit alongside the equity in your current home to purchase a higher-value property. Home equity is the difference between your property’s current value and the remaining mortgage balance. Many homeowners use this equity as leverage to buy their next property.
For example, if your current home is valued at $800,000 and you owe $400,000 on your mortgage, you have $400,000 in equity. By combining this equity with your $100K cash deposit, you could afford a property in the $1 million+ range, depending on your lending approval. This strategy is ideal for upgrading to a larger home, moving to a better location, or purchasing an investment property.
Final Thoughts
Whether $100K is enough for a house deposit in New Zealand depends on the type of property you want and your financial situation. From buying an affordable existing home to leveraging your equity for a higher-value property, there are multiple ways to use your savings strategically. Before making a decision, it’s essential to assess your budget, talk to your mortgage broker, and factor in additional costs like legal fees, insurance, and moving expenses. By understanding your options, you can make an informed choice that aligns with your housing goals.
Ready to purchase? Reach out to the team at equiti we are here to help!