How much money should homeowners have in their bank account if they lose their job?

- Homeowners faced a tough 2025 with high interest rates, unemployment, and falling property values.

- Frances Cook advises having three to six months of core expenses saved for job loss.

- Nathan Miglani suggests options like mortgage holidays and using shares or KiwiSaver in emergencies.

2025 was the year that pushed many homeowners to the brink, as a cost-of-living crisis, crippling interest rates, shrinking property values and the highest unemployment rate in five years took their toll.

The economic outlook for 2026 is rosier, with experts predicting a stronger jobs market and an uptick in the housing market.

But the tales of job-loss woe amid restructures and redundancies that emerged across New Zealand in 2025 can be a useful lesson in how much money a homeowner should have stashed away, just in case unemployment comes knocking.

Many people who bought at the height of the property market have found themselves in negative equity. Photo / Getty Images

Frances Cook, financial journalist and host of the Making Cents podcast, said there’s a standard rule when it comes to savings needed in the event of a job loss.

“If you are on a salary, it’s a good idea to have about three months of just your core expenses – not the nice to have, not what you spend now – but just your core expenses in cash savings," she told OneRoof.

“If you are self-employed or freelance, then that might mean more like six months because that can be more unstable.”

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The three or six-month reserve would cover the mortgage, power, food and other bills such as rates and insurance – “the things you have to pay no matter what” – if suddenly a homeowner found themselves without an income.

“It is a lot, and I think it can be quite intimidating for people,” Cook said.

“A lot of New Zealanders don’t actually even have a thousand dollars in savings, so that’s kind of terrifying.”

Cook’s advice is to break down a savings plan into achievable goals, before it gets to the point of losing a job. “What would it take for you to have a month of those savings and start putting that aside?”

Frances Cook: “A lot of New Zealanders don’t even have a thousand dollars in savings.” Photo / Dean Purcell

Once the first month is achieved, celebrate the success, Cook said, and then crack on with saving the second and third months. “Break down the goal. Make it not too intimidating and get it piece by piece.”

In 2021, ASB Bank said four in 10 of its customers had less than $1000 saved. “A lot of us aren’t in the habit of putting aside something every single week,” Cook said.

“It gets put in the nice-to-have bucket, especially at a time when the economy is feeling a little bit tough.

“But at a time when the economy is feeling a little bit tough, that’s when you need that safety net more than ever.”

Her advice was to “connect” routine saving to bigger goals, rather than seeing it as losing money right now. “I’m building myself safety, I’m building myself security and lower stress – connect it to those reasons why it’s worthwhile.”

If the worst happened and a homeowner lost their income with no money to fall back on, Cook said the first port of call was the bank or mortgage broker.

“A lot of people will try to figure it out or hope it gets better by themselves first. I totally understand that instinct. The sooner you get in touch with your bank, the more options you will have.”

Cook said people shouldn’t feel intimidated talking to the bank, or worried about “getting into trouble”.

Experts urge those in strife to contact their banks straight away. Photo / Alex Burton

“The bank doesn’t actually want to take your house off you because a mortgagee sale is a huge pain for everyone involved – it’s actually not a good outcome for the bank either.

“They want you to still be there, still paying that mortgage. Talk to them while you’ve still got all the options on the table because the tighter things get financially the fewer options you’ll have left.”

Some of those options could include extending the term of the mortgage, for example spreading payments from a 20-year loan across 30 years. Another was interest only for a period.

“If you’re really, really in a pinch, they might agree to a mortgage holiday for a short amount of time.

“All of these things are going to depend on your bank and the faster you get in touch, the more flexible they are going to be with you.”

Cook said she was aware of people who’d been looking for jobs for six months to a year and hadn’t been able to find anything.

Her advice was to take what was available or get creative and go outside the usual career “just to get the bills paid”.

“It’s probably a situation of take what you can get for now, even if it’s part-time or freelance or more of a side hustle.”

Some homeowners who had found themselves in financial stress recently were those who’d bought at the peak of the market during Covid, in 2021 and 2022, Cook said.

“Especially if they were first-home buyers, they were probably squeaking in with the best deposit they could.

“But they don’t have a whole bunch of cash behind them and then if their house price has gone down, they’re in a tight spot.

“Because they can’t just sell to get rid of it because they’re going to be losing a lot of money, a lot of equity, a lot of that deposit.”

Squirrel Mortgages managing director Nathan Miglani said many homeowners who bought during the Covid boom, when house prices jumped 35%, were now in or close to negative equity.

He said a mortgage holiday could be up to three months in cases of financial hardship. “The banks always try to look after their clients ... they always like to give options.”

Going interest-only for a set period of time or taking a mortgage holiday did not damage a homeowner’s credibility, Miglani said.

There were also other ways to ensure “savings”.

Miglani said one in four of his clients had shares. These might range between $5000 and $50,000 which homeowners could cash out and use in a “worst-case scenario”, such as a job loss.

However, he said this form of “savings” was usually limited to second and third homeowners or investors who were often in a better financial position than first-home buyers.

For absolute dire circumstances, homeowners might be able to tap into their KiwiSaver, Miglani said. “It depends on the KiwiSaver provider. Some providers are very relaxed, and they can release money under financial hardship straight away.”

Another way to have cash in reserves was through revolving credit, whereby money paid on the mortgage can be withdrawn if needed.

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