PURCHASE AND FINANCE DEPOSIT EXPLAINED - Did you know that there are TWO TYPES of deposit involved when you purchase property?
There are 7 essential elements an agreement must have to be considered a valid contract one of these is consideration - generally this is $$. As property contracts most often involve significant sums of money it is normal for 'consideration' to be met by paying a deposit. This deposit is held in trust on your behalf and counts as part of the total funds you need to pay for the full cost of the purchase.
The other deposit is the 'skin that you have in the game', or total funds you will contribute to the purchase - borrowers deposit. This deposit is important as determines the LVR (loan to value ratio) and, therefore, how much money you can borrow.
You can source your borrowers deposit from a number of places. At least 5% must come from your own savings and KiwiSaver can be used for this. If you are eligible you can also apply for a First Home Grant through Kainga Ora. Another source of deposit in from your family - if they have the means they could gift you (like an early inheritance) or loan you funds.