Can you afford a home in NZ?

[snwtoy]

Mad props to you guys who wanted to buy a house and actually have.

I want to, can service the mortgage easy, but am having issues paying rent and saving for the deposit.

I can't move too far away (where rent is cheaper), as (a) that increases my travel costs, and (b) lessens my client base.

Things are looking up though, hopefully will get there in the next 12-18 months!

[Al]

Some people just don't want to be tied into somwhere/thing for that long. I certainly don't.
Also unless you earn well above the average age, you need some kind of break to own a house, Ie lump sum payout (inheritance) parents helping you out or something.
If you have none of that it's a lot harder. Especially if you are single and can't commit 2 incomes.
Sure you could still do it, and become one of the aforementioned hand to mouthers for 20 years....
Living is not pissing away 20 years living hand to mouth just so you can say you own a house at the end of it.
Thats my stand anyway

A mortgage isn't being tied in, its a debt that can be serviced by a tenant if need be.

I don't know how much you earn Revvy, but I'm a couple of months away from being 100% debt free, I could piss bowl a $400/week mortgage and I work in a grocery store! Hell If I was still with Jill, we could have afforded to build a new house. You just have to want it bad enough and make new opportunities for yourself.

[sergei]

You haven't spoken to a broker but are an expert on the affordability / lack there of, of buying a property?

Is it just me or does that not add up?

Using the excuse you're a foreigner for anything in this thread is a bit of a joke tbh. No matter where you are from the banks / brokers aren't going to discriminate. Half of "NZ'ers" are probably foreigners, myself included. I certainly don't use it as an excuse and someone with your smarts shouldn't either.

No certainly banks will not discriminate, but employers - they will certainly do. Because I am foreigner they expect me to settle on lower pay.

Why do I need to see broker when I can do simple math myself?
Seriously do you really need for someone to tell you that you cannot afford $700p/w mortgage while earning 650p/w? If buying a house involves paying almost all income, while living off income from my wife, I consider this life style unaffordable.

What is with people these days? Seriously how many people here don't have a debt?
Reminds me of this comics:


Seriously, I am not comfortable living under threat of bankruptcy and unable to afford instability for such a long time.

This culture of living in debt desensitises people making it "OK" to owe a lot of money and perpetually pay instalments.

[sergei]

Some people just don't want to be tied into somwhere/thing for that long. I certainly don't.
Also unless you earn well above the average age, you need some kind of break to own a house, Ie lump sum payout (inheritance) parents helping you out or something.
If you have none of that it's a lot harder. Especially if you are single and can't commit 2 incomes.
Sure you could still do it, and become one of the aforementioned hand to mouthers for 20 years....
Living is not pissing away 20 years living hand to mouth just so you can say you own a house at the end of it.
Thats my stand anyway

Totally agree with you.

[Bling]

None of those people in the comic own a house though they probably all rent and clearly have no savings, so in a way its accurate, but only of people renting that aren't saving anything.

$700/week services a $534,530 ($74,830 deposit) why do you need a 500k+ house to start with? I know you live in Auckland and s**t, but i'm sure you could make a compromise on area and find a cheaper place than that! Can I ask what you do spend your $650/week on? as that's more than I earn I mean it must go into savings if the thought of spending it upsets you.

[sergei]

None of those people in the comic own a house though they probably all rent and clearly have no savings, so in a way its accurate, but only of people renting that aren't saving anything.

$700/week services a $534,530 ($74,830 deposit) why do you need a 500k+ house to start with? I know you live in Auckland and s**t, but i'm sure you could make a compromise on area and find a cheaper place than that! Can I ask what you do spend your $650/week on? as that's more than I earn I mean it must go into savings if the thought of spending it upsets you.

That is if you do a 25 year loan (financial suicide to be honest).
I want to settle as fast as possible, but my calculations involved realistic 12year, $300,000 @9%.

To put in perspective I am almost 30. In 25 I will be 55. I will be geriatric zombie by then.

[sergei]

As for the where my money goes into. Let me see...
I don't drink, so no spending there.
I don't smoke.. I don't buy jewelry, expensive clothes or anything fashion related... So no spending on useless junk.
I buy shoes once in 6 months (same for clothing).

But here where a story starts. When my family (including me) came to NZ we had only 4 hand bags. They included only basic clothing. Also we only had $6000 NZD in the pocket (we sold apartments for $8000USD back home and half of it spent on tickets). That was 13 years ago. We had to buy every thing from scratch.

I recently got married. That costs a lot of money (no regrets).
Only thing we spend a lot of money is fancy food, reason why: my wife has this weird hobby she likes to cook fancy food and blog about it (she recently started English version of it here http://www.gourmetrecepies.com/ shameless plug). There is nothing I can do about this spending (just for my own sanity - it is worth it, there is russian proverb - As long as a child does not cry it does not matter what pleases it).
I am saving as much as I can. But my wife, recently coming to NZ (just over 2 years ago), also had to start from 0, so next step is buying her a car. So here are our spending. I am very cautions on loans (as you can probably gather).

But wanting to start a family (kid perhaps) I want to be sure that the kid will have a place to live, and be supported properly. Right now I cannot afford a house and a kid. So we are in "limbo", financially wise.
I am not prepared to jump in head first in half a million dollar commitment (that is 300,000 loan + interest), knowing that job is not really secure and I can lose it any day (because companies go down, restructure, etc.), makes me really cautious on borrowing that much. And if we decide to have a kid, then we are on half of income automatically.


I am saving but I don't see how I can

[solitaire]

Sound like you need a change of job Sergei mate, if they are under paying you and you are concerned about the stability of the company it's time to make a move.

[sergei]

Sound like you need a change of job Sergei mate, if they are under paying you and you are concerned about the stability of the company it's time to make a move.

I agree, I also just (almost 2 years) "moved in", I am looking in the same field right now.

I am working for what is considered "McDonald's" of website companies.

[solitaire]

I think another problem to this arguement is that we all come from different areas... even in auckland affordability of housing varies on where you live.

Where I live in orewa renting and running a mortgage are essentially the same (mortgage a bit more expensive all up) - but in mt albert for example renting is way cheaper.

[solitaire]

I am working for what is considered "McDonald's" of website companies.

Ninja Edit!!!

You have looked on seek and trademe? I have noticed a sudden surge(i) in the job market in the last couple of days... now is the time.

[sergei]

I am working for what is considered "McDonald's" of website companies.

Ninja Edit!!!

You have looked on seek and trademe? I have noticed a sudden surge(i) in the job market in the last couple of days... now is the time.

I am constantly looking.

There is no position for intermediate skilled sysadmin like, they either want a junior with sucky pay that also doubles as support, or bad ass with 5years+ experience.

[Bling]

That is if you do a 25 year loan (financial suicide to be honest).

I'm on 30 year term as the payments are less. Very suicidal I do however plan to be mortgage free in 10 years. How exactly that will happen i'm not sure, but you have to have goals. The first place I looked at was 200k, this was at peak prices too, the deck was full of holes etc. I still wish I got that place as I planned to do it up and flick it on for easy money. My offer wasn't accepted though so I moved on to bigger and better things.

I haven't had any financial help at all, I did get parents to co-sign initially, but that was just to make it easier at the time. I would have still done it without that, just would have changed my plans / had to do more paperwork. You have to think up a plan that can suit your situation. Buying run down houses and doing them up to sell for profit is very popular here, so that could be something you could try on the side. If you can't make a certain situation work, move on, think of something else.

Change industries if the one you're in doesn't work for you. I trained in IT but the market got flooded with people looking for similar work so I flagged it all together. I'm now training to be a gas fitter. Was a painter hand before that. I don't plan on being a gas fitter forever either, retirement can't come soon enough

[Al]

Rich Dad, Poor Dad.

Read it.

[frost]

That is if you do a 25 year loan (financial suicide to be honest).

I'm on 30 year term as the payments are less. Very suicidal I do however plan to be mortgage free in 10 years. How exactly that will happen i'm not sure, but you have to have goals. The first place I looked at was 200k, this was at peak prices too, the deck was full of holes etc. I still wish I got that place as I planned to do it up and flick it on for easy money. My offer wasn't accepted though so I moved on to bigger and better things.

I haven't had any financial help at all, I did get parents to co-sign initially, but that was just to make it easier at the time. I would have still done it without that, just would have changed my plans / had to do more paperwork. You have to think up a plan that can suit your situation. Buying run down houses and doing them up to sell for profit is very popular here, so that could be something you could try on the side. If you can't make a certain situation work, move on, think of something else.

Change industries if the one you're in doesn't work for you. I trained in IT but the market got flooded with people looking for similar work so I flagged it all together. I'm now training to be a gas fitter. Was a painter hand before that. I don't plan on being a gas fitter forever either, retirement can't come soon enough

how much is your early payment fee?

[Bling]

Well we are only fixed till May at the moment, if that's what you mean? 30 year term doesn't mean much really in the scheme of things. Just means that while i'm fixed I pay the correct amount to pay it off in 30 years time. When we come off fixed we could pay it all off. Donations? Just means pay less than 25 year term for now. Revolving credit on another loan means no early repayment fees.

[solitaire]

There is no position for intermediate skilled sysadmin like, they either want a junior with sucky pay that also doubles as support, or bad buttocks with 5years+ experience.

Have you considered contracting? Seem's ideal if you are not in a mortgage. Good money and if you have the discipline to put aside the extra cash you get the risk is offset.

Contracting is a great way to get experience, I left new zealand on 26k and went to england to go contracting, when I returned 4 years later I had more than trippled my income. Obviously you won't be leaving New Zealand but you can pickup experience quick and a good accountant will help you offset all sorts of expenses.

If you don't like contracting find a big company and join them and work your way up.

You have MCSE 2003 etc?

[sergei]

You have MCSE 2003 etc?

I am Linux sysadmin, that means whole load of different set of technologies (KVM/XEN/"cloud", LVM, CFengine, Nagios, shell scripts, etc. vs whatever windows sysadmins use). To be honest, I don't even know what being windows sysadmin consists of, sure I know my way around registry and all, but I feel hopeless without my favourite set of standard tools (tail, grep, awk etc.).

[~SlideWays~]

Well we are only fixed till May at the moment, if that's what you mean? 30 year term doesn't mean much really in the scheme of things. Just means that while i'm fixed I pay the correct amount to pay it off in 30 years time. When we come off fixed we could pay it all off. Donations? Just means pay less than 25 year term for now. Revolving credit on another loan means no early repayment fees.

Exactly, a fixed term means nothing. Except the calculation of minimum payments.

Ours is 25yrs but you lock in the fixed rate for a term of 6months to 5years (with our bank) and that is the real fixed term, the one that matters.

After that period you would need to fix again for another 6months to 5 years BUT before you do that your mortgage is actually ona floating rate and you can pay in whatever you want and not have to pay extra fees such as 'early payment'.

Last year our first 3yr term finished and we made a big payment before fixing it again. So this decreased the total mortgage and therefore the interest and lowered the minimum payments. Bonus is that we increased our payments so we are far better off.

Another trick to do is splitting the mortgage into two:

- One being the larger portion on a fixed rate with fixed payments. You pay penalties if you pay in a lump sump during the fixed term. Just pay this like a normal mortgage.

- Second smaller portion on a floating rate and no fixed term which we treat as a shared bank account. So we can put money in at anytime (savings, income, drug money), and we pay our bills on a credit card (no interest) then pay off the credit card straight from this floating account so that money has been sitting in the account lowering the amount we pay interest on. The bonus with this is the interest is calculated daily (but paid monthly) so we pay less interest for when we have spare cash in there.

Hope that makes sense.

[~SlideWays~]

In summary, you can make a 30yr mortgage into a 10yr mortgage without the bank taking your thumbs.