Your Guide To Buying Your First Home

Learn how to strategically buy your first home and be debt-free faster.

Introduction

If you’re reading this, well done on taking your first step into pursuing a strategic first home purchase!

Buying your first home can be a daunting experience, and without the right guidance, the process can be hard to manage. However, buying a home is one of (if not) the largest investments people make in their lifetimes, so it’s important to do it well.

Forbes Magazine notes that purchasing your own home is one of the wisest financial moves people can make, and generally, people who own their own home have a net worth of 40x more than those who rent.

So, to ensure you’re making a smart financial choice with your first home, it’s important to put a strategy in place that guides you into a future of financial freedom.

We want to help. And to do this, we have written this document to outline what we believe is one of the best ways for first-home buyers to structure their purchases, not only to get into their first home but to become mortgage-free sooner.

The beauty of the strategy is in its simplicity, and we can’t wait to help run through it with you together. Let's get into it.

Benefits of Buying Your First Home

Before we jump into the strategy, it’s important to understand the benefits of what buying your first home can really mean for you.

We’ve broken it down into three key concepts that make home ownership worthwhile:

1. Safety

As a tenant, you’re at the mercy of your landlord, and it’s hard to take full ownership of your living situation. Unexpected rent increases, inspections, and sometimes unruly living conditions can be a negative influence on your busy life.

For the younger generation who are living in shared flats, this becomes an obstacle every year as you try to find a suitable house for you and your flatmates. If finding a house is hard enough, it then gets tougher when there are lots of applicants, and you fall short again.

Landlords control rent every year, and with rising costs, you don’t want to be hit with the burden of paying too much rent with no reward. Most homeowners instead pay a mortgage, which relates to the loan they needed to purchase the house.

Although this is still a cost to stomach, homeowners know that every payment they make goes toward paying down the principal of the loan and ultimately building wealth gets them one step closer to full financial freedom.

Buying your first home is one of the best ways to set up your future financial security

2. Choice

With home ownership, you have control over what you do to your home and your living situation.

Forget about 3-monthly property inspections; create the space you want, and live how you want to live. As the years go on and you save up some money, you have the ability to give the house a bit of a renovation. This is all possible when your name is on the title, and you have the freedom of choice.

It might seem like a small factor, but home ownership is an emotional purchase for a lot of people, so it's important to cherish that.

3. Monetary

Lastly, and perhaps most importantly, the monetary benefits of owning your own home are second to none.

As alluded to before, paying your mortgage every week gets you one step closer to complete financial freedom – being mortgage-free.

Rent payments are considered dead money because you’re essentially paying for someone else’s mortgage, whereas paying your own mortgage means you’re slowly chipping away at the principal you have outstanding. In the short term, renting can often be cheaper, but the long-term prospects are much lower.

We will discuss this more and look at some real-life examples later on. Our strategy will mention “building equity” and “recycling your deposit,” which are key terms investors use when they want to build a property portfolio.

These concepts will become clearer as you read on, but the one underlying factor that makes any of this possible is owning your own home.

The Strategy

Now that we know the benefits of homeownership, it's time to discuss a strategy to maximise your financial position.

In simple terms, our strategy revolves around a smart acquisition of your first home and then another acquisition of an investment property in five years’ time.

Why do we use this as a strategy for first-home buyers?

We use this strategy as a way to speed up the mortgage repayment process and get you on a path to financial independence sooner rather than later. Consider this:

Most banks offer a 30-year loan term which means you have 30 years to pay off your mortgage. This process is called amortisation. With this length of time comes a hefty interest cost because you’re being charged interest on the loan from day one.

So, we want to get rid of the mortgage as soon as we can to limit the amount of interest you’re paying to the bank. As you can see in the graph, the downward-sloping line shows your mortgage being paid off over time, while the upward-sloping line is the projected capital gain in an investment property.

At some point in the future, these two lines will meet.

When the lines intersect, this means that the capital gains you have in your investment property will be equal to the mortgage amount you have outstanding on your home loan.

At this point, you can sell your investment property and use the equity you gained on the sale to fully pay off your home mortgage as well as the mortgage on the investment property. All else being equal, you would now own a mortgage-free home.

Now that we have a basic rundown of the plan, let’s look into the specifics of how we can actually achieve these goals and make this possible.

Step 1 - Find Your First Home

None of this plan is possible unless you make a smart financial decision when it comes to your first home.

Thrive Investment Partners will be able to help you navigate through the array of listings available in the market and recommend you options that are best suited to you.

New builds are a great choice for your first home because you get all the benefits of a warm, dry, healthy home with none of the large maintenance bills that you’ll get with an existing property.

New builds are also great because you have 10-year warranties protecting you from issues with the build itself which should promote the utmost confidence when it comes to securing the property.

Securing finance is a big part of getting into home ownership, and there are a few checks and balances to tick off before you get approval letters. Our network of mortgage professionals will be able to assist you, and we can make referrals to suit.

Deposit Requirements

As a first home buyer, you can get a deposit as low as 5% as long as you have the income to service a 95% mortgage. However, in most cases, you will generally require a deposit that is 10% or 20% of the value of the property.

Example:

David wants to buy his first home off the plans for $600,000.

David has lending preapproval from the bank for $540,000 and a deposit of $60,000.

This puts David in a perfect position to buy this property because his pre-approval matches directly with the 90% LVR, and his deposit reaches the minimum 10% requirement.

Step 2 - Adding an Investment Property

There is a lot of water to go under the bridge between buying your first home and buying your first investment property, which is why our strategy is based on this second acquisition being five years after buying your first home.

What we’re trying to do here is build up equity in your home.

Equity is the difference between the value of your property and the loan you have outstanding. The banks allow you to use 80% of the equity in your house and this is called “useable equity”.

To calculate your usable equity, all you need to do is multiply your current home price by 80%, and then subtract the outstanding mortgage amount.

Usable Equity Example

• Current Home Value: $800,000

• Current Mortgage Balance: $400,000

• Useable Equity: $240,000

You can calculate this by multiplying $800,000 by 80%, and then subtracting the outstanding mortgage balance.

I.e. ($800,000 x 80%) - $400,000 = $240,000

Therefore, this person has $240,000 to use as a deposit for their first investment property. This is called leverage.

Once you have built up a sufficient level of equity in your own home, you can leverage this as a deposit for an investment property. The big benefit here is that you don’t need to save any cash to raise the deposit.

Assuming you have sufficient serviceability, it’s time to search for an investment property.

Obviously, there will be a lot of changes to the market over the next five years or so, so for now, we’re just going to assume you’re purchasing a property worth $700,000 five years from now.

Once you have the property, it's time to calculate where we’d expect the intersection point to be between the mortgage you have left to pay and the approximate capital gains in the investment property. This is where our expertise comes in handy.

Below is an example of this in action.

Once we know the timeframe, we can estimate how much interest you will save time, along with some other powerful tools that we can discuss together.

Step 3 - Become Financially Independent

Patience is the name of the game. Results don’t happen overnight, but trust the power of time in the market to reward you.

Over a period of time, as you pay down your own mortgage and the value of your property increases, you will inevitably reach the point where you can sell the investment and become mortgage-free.

Without the burden of having a mortgage over your own home, you will have true freedom and be in a financial position where it costs you next to nothing to live in the house you reside. In a lot of cases, using this strategy can save years of payments to the banks and hundreds of thousands of dollars in interest costs.

Buying Vs. Renting

Consider a couple, Ben and Sarah. They are weighing up whether they should buy a property to live in or rent.

They have found the perfect property, which they can choose to purchase for $649,000 or rent it for $540 per week.

Financially, what makes the most sense?

We worked out that it would cost this person approximately $687 per week to own the property if they bought it, which means they’re $147 worse off per week owning it rather than renting.

But that’s not the whole story.

We modelled the same strategy outlined in this document and worked out that the intersection point between the loan outstanding and capital gains was 14 years.

This means that this person could save 16 years of mortgage repayments and $400,000 in interest costs.

If they continued to rent, in the same 14 years, they would’ve spent approximately $400,000 in rent with no assets to show for it. The power of compounding growth and leverage has saved this person hundreds of thousands of dollars in interest and given them the financial freedom to live a better life.

Conclusion

Buying your first home is one of the best financial decisions you will make in your life if done well.

With specialist help such as Thrive Investment Partners, you can take confidence that choosing your first home wisely and following a personalised strategy will benefit you greatly in the long run.

It is hard to overstate how much financial and personal benefit can come from home ownership, and with the assistance of Kainga Ora, among other things, home ownership is becoming more achievable for thousands of Kiwis who couldn’t previously reach the target.

Talk with our team at Thrive Investment Partners now about your home ownership options and get a personalised plan designed to unlock your financial future.

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How Can We Help You?

We help Kiwis build wealth through property investment. Our advisors will take the time to understand your individual needs and recommend suitable investment properties to help you build wealth and set up your retirement.

What Does This Look Like?

We use a 3-step process:

1. We start with a Discovery Meeting where we learn about you, your goals, etc., and you learn more about us.
   

2. This is followed by a Strategy Meeting where we model your retirement plan, understand key investment concepts, and briefly touch on some investment choices.
   

3. Finally, an Asset Selection Meeting where we discuss investment options in more detail and make any recommended adjustments based on what we now know about you.

Who Are We Right For?

We help people make smart investment choices and set up their futures. From first-time investors to experienced investors, we can cater to a wide range of people and help set up their futures through research-based property investment.

How Much Does It Cost?

Our advice is free to you! If you choose to invest, we’re paid by the property developer. This developer-paid model allows us to provide no-obligation property investment advice in New Zealand, without charging clients directly.

What Do We Do, And What Don't We Do?

What We Do

We offer end-to-end New Zealand property investment advice, helping Kiwi investors grow wealth through smart, data-led decisions. Our focus is on quality new builds in strong locations, tailored to your goals, guided by a team that knows the NZ market inside out. What We Don’t Do

We don’t do KiwiSaver, shares, cryptocurrency, or broad financial planning. Thrive is not a generalist firm. We specialise in property investment in New Zealand because that’s where we deliver the most value. By staying focused, we cut through the noise and help our clients make confident, well-informed property investment decisions.

How Do I Start?

Start the process now by booking a time to talk with our advisor here.