First home buyers urged to stick to savings goals

First home buyers urged to stick to savings goals

Kiwibank takes out CANSTAR First Home Buyer award for second time.

New Zealanders aiming to buy their first home shouldn’t be discouraged by the negative sentiment surrounding the idea, as affordability has been an issue ever since the original caveman decided to buy his own cave.

There are various ways to overcome the obstacle of finding the funds needed to buy a first home but most of them involve putting a structured savings plan into place and then being consistent about following that plan for however long it takes to get to the end result.

There’s no doubt the challenges blocking first home ownership are significant and those aspiring to get into their first home need extra help, according to financial research and ratings group CANSTAR.

“It’s vital that financial institutions help educate first home buyers about how they should be preparing themselves, setting savings goals and offering savings vehicles that provide incentive towards the end goal of home ownership,” CANSTAR National Manager Derek Bonnar said.

“First home buyers have special needs and should be encouraged to prepare themselves so they are in the best possible financial shape to take that next, bold step.”

Recognising the significant difference between first timers and those more experienced in the complicated ways of home loans, CANSTAR examined what the banks offer this unique group of people.

CANSTAR has just released its annual First Home Buyer Award which looked at 36 loans offered by 9 lenders to determine not just the lowest-priced loans but also the whole home-buying experience they offer to this customer group.

As part of the evaluation, CANSTAR reviewed printed and web-based educational material, the process involved, level of access to a real person to provide that guiding hand and, of course, products and features tailored specifically for first home buyers.

“Kiwibank once again ticked all the boxes for the second year in succession. They were a very convincing winner, due to the depth of products and services tailored specifically for first timers and we congratulate them on their commitment to this specialised market segment,” Mr Bonnar said.

CANSTAR was particularly impressed by Kiwibank’s personal finance management service, Heaps!, where first home buyers building a deposit can track their finances and goals.

“Kiwibank continues to strengthen its offering with the release of an offset home loan which will assist not only first home buyers but all borrowers to save money on their home loan,” Mr Bonnar said.

“This offset home loan also comes with a market leading rate which will save Kiwis money, even without using the offset facility.”

While all banks provide a variety of services that assist New Zealanders buying their own homes, Kiwibank offers the full range of educational support, calculators and product features that narrow the deposit gap. It also offers easy access to mobile home loan specialists across the north and south islands.

“This is quite a coup for a bank that doesn’t have dedicated branches as such, basing itself instead in post offices across the country,” Mr Bonnar said.

CANSTAR congratulates Kiwibank for the excellent job it is doing for New Zealand’s first home buyers and notes the marked improvement in competition this year which has to ultimately benefit the consumer.

According to Mr Bonnar, there are 10 important tips for those who think saving for a first home is impossible.

CANSTAR Tips on how to save for a home

1. Track your spending: keep a diary for a month or use a smartphone app such as Expense Manager to find out what you are actually spending your money on. This exercise is a real eye opener for some people.

2. Write a budget: start by using the totals from your spending diary, then look for ways to cut down certain areas and find money within your money.

3. Find something to give up: do you smoke, drink, eat takeaways, buy expensive makeup, or go out too many nights a week? Saving for a first home requires sacrifices and virtually everyone can find something to give up.

4. Cut up your credit cards: if you spend cash you’ll spend less. Once the cash is gone for the week or month the spending will stop in its tracks.

5. Join KiwiSaver: The more you save into KiwiSaver the greater the deposit first home buyers can accumulate.

6. Moonlight: get a second job, work overtime, or start a small business – even if it’s only window cleaning or babysitting. All money is good money when you’re saving for a deposit.

7. Swallow your pride: accept that for a few years you may not have all the flash things your friends buy or the expensive nights out. Over time, however, home ownership will almost certainly lead to a better standard of living.

8. Ask around for ideas: ask your friends and whānau for tips on saving money.

9. Make yourself more employable or indispensable in your current role: Those with in-demand skills can command more in the job market, and valued employees are more likely to be better rewarded. Be prepared to upskill to get that next great job or look for opportunities to gain new skills or help out in your current role.
10. Be clever: look for unusual ways to save or make money. Sell unwanted items on Trade Me. House sit instead of rent Or find jobs where you’re paid to sleep over.

“People can and do find ways to save by being honest with themselves, After all, once in your own home, the capital gain is yours, not the landlord’s,” Mr Bonnar said.

Consumers can download the CANSTAR first home buyer report and methodology on www.canstar.co.nz

About CANSTAR:
CANSTAR provides Australia and New Zealand's only fully interactive online research service in retail and business finance.

Founded in 1992, CANSTAR Pty Limited (formerly CANNEX) is Australia and New Zealand's premier researcher of retail finance information for over 250 institutions such as Banks, Building Societies, Credit Unions, Finance Companies, Brokers, Mortgage Originators, Life Companies and finance related Internet Portals.

CANSTAR customers use the extensive database for competitor analysis as well as a means of disseminating their product range. CANSTAR also distributes this information to print and electronic media for publication and to Agents, Accountants, Brokers and Internet Portals for use in advising their clients.
0What are the CANSTAR star ratings?

CANSTAR researches, compares and rates the suite of banking products listed below. Results are freely available to consumers who use the star ratings as a guide to product excellence. The use of similar star ratings logos also builds consumer recognition of quality products across all categories. Please access the CANSTAR website at www.canstar.co.nz if you would like to view the latest star ratings reports of interest.

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