First Home Buyers – deposits and ‘deposits’

If you are the Purchaser under an Agreement for the sale and purchase of property and that Agreement becomes unconditional, you will (in most circumstances) be required to pay a portion of the total purchase price to the Vendor.

This payment is called the deposit.

When you are negotiating to borrow money from your bank to assist you with the purchase of a property, the bank will usually want to know if you have any money of your own and if yes, how much you have.

This is because the amount of money that you already have, plays a role in determining how much money (if any) the bank can and will lend to you.

This money that you already have is also often referred to as the deposit.

The word "deposit" can refer to two different things in a property purchase:

1. The sale deposit – a portion of the purchase price (e.g. 10%) paid to the vendor once the sale agreement becomes unconditional.
   

2. Your personal deposit – the money you contribute toward the purchase, which helps determine how much a bank may lend you.
   

This dual meaning can cause confusion, especially for first home buyers using KiwiSaver.

Whether you are talking to the real estate agent, your lawyer, your mortgage broker or your bank, it's important to clarify which type of deposit is being discussed with all parties involved.