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**Challenges in Entering the Housing Market**

Me and my wife are contemplating entering the housing market in the near future, but we are faced with daunting interest rates and hidden costs associated with homeownership. This situation makes it feel almost unattainable at this point. Currently, we are renting a 2-bedroom house that we believe is suitable for raising a child, as we are expecting one. Unfortunately, we are not in a favorable position to borrow from banks until my wife resumes work. Our main goal is to diligently save for a substantial deposit to purchase a home and also maintain a comfortable lifestyle.

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**Seeking Financial Advice and Support**

Are there others currently facing a similar predicament? Are there alternative ways to maximize the potential of our savings and investments during this time? We would appreciate insights and advice from individuals who have been in a similar situation or from financial experts who can provide guidance on making our money work for us.

**Financial Snapshot**

Our combined household income is currently 200k, but we anticipate that it will be halved once the baby is born. We have savings amounting to 60k, which are earning interest at a rate of 4.5% per annum. Additionally, we have emergency funds of 36k also earning interest at the same rate. My wife has 20k in KiwiSaver (I am unable to access mine yet) and we are proud to say that we have no outstanding debts.

**Thank you for your assistance and advice!**

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12 Comments

  • lakeland_nz

    Nothing wrong with waiting.

    We looked, couldn’t find anything in our price range, gave up and went back to saving. Then for unrelated reasons we had to move cities and houses were cheaper in the new city.

  • [deleted]

    I would get your family raised till they are all primary school age (assuming you have more than one). Then you have got through the hard times of daycare expenses and only have before and after school care to deal with which is about a third of the cost. You seem to be doing well, keep it up and don’t put pressure on yourself now with interest rates high.

  • Material_Science_876

    Was in a similar position. A roof leak in our rental (2 year olds bedroom) forced us into action, spent every dollar we had getting into a 3br new build townhouse. Things are comfortable but tight, but the overwhelming relief of not renting is really REALLY good for the mental health. Its also much better for our now 3 year olds physical health with it being temperate, dry and spacious enough to play in.

    Baby went to daycare at 6months, the dual income is pretty much a requirement, depends on your partners income but usually tips hard into being worthwhile

  • Upstairs_Pick1394

    It depends where you live. But with interest rates so high it’s not the best ttiem to buy.

    You guys earn a lot but the fact it will be cut in half you would probably want to consider waiting until the child is 1 and your partner is heading back to work.

    With a combined salary that high with proper budgeting and you could smash a mortgage pretty wuickly.

    You have enough savings for a starter in most NZ cities. But it would cost more than renting

    The mistake many make is going for your dream home off the bat and upgrading beyond your means.

    If you can find something small say three bedroom and pay similar to what you pay now in rent, it’s worth it. But it’s unlikely you can find that unless you went small.

    Owning would motivate you to both save and earn more money.

    Before I bought my first house I was just cruising and not overly ambitious.

    The feeling is pretty good and it’s less stress than renting.

    You do need to factor in insurance, rates and maintenance l which can run close to 5k+ a year, again depends on where you buy. But it’s close to $100 a week.

    Your deposit is a bit small. You would want to get it upto maybe around 150 to 175k on a 600k house. Then it might be worth it.

    No need to rush in, prices are looking to start heading up a bit but interest rates are looking to drop so it will likely even out while you wait and save a bit more.

    You are looking at that 600k price range while on 100k with 150k deposit if you want it to be similar to your rent.

    You could work out how much principle you would be paying off each week and see if it event out.

    The goal is not to lose money and paying off principle is a type of saving. Then there is potential for capital gains.

  • realdjjmc

    Stay where you are, keep saving and once your kid is 2 or 3 start thinking about which school catchments you want to be in.

    Stay stress free for a bit longer (renting means: no rates or home insurance or maintenance)

    If you purchased now you would be paying more in interest than rent. (Renting is on average 40% cheaper than buying)

  • Mysterious-Koala8224

    Delay based on the info provided. Need to know more to give better advice, such as where you are based and what you pay in rent. Home ownership vs renting has swung in favour of renting in most cities (this of course ignores capital gains which can’t be counted on, particularly after the bull run of the last 10yrs).

  • Hot_Pea9820

    I think you are OK to delay buying for now.

    The only caveat being house prices will rise between now and then.

    A couple of quick points.
    I’m of the position stability in the home (including not moving every couple years helps raise stable kids). Owning assures you of this, however child is unlikely to remember a move before they are 4 or 5.
    School zones do not apply to day care, so renting or owning you don’t have to worry about where you are for a short while.
    Interest rates over a 25 to 30 year period average out at about 6.5%, the current interest rates in recent history are high, but on the life of the loan are just a touch above average.
    Your mortgage payment (assuming you don’t top up a lot) will remain relatively static, save changes in interest rates, rent typically rises ~8% PA, in the medium term (5 years) owning will be equal if not cheaper, and in the long term (10 – 15 years) will be significantly cheaper than renting.

    Another 15 to 18 months, hopefully your kiwi saver will be ready to go, and you’ll be away laughing.

    Good luck

  • Fit-Plastic1593

    Congratulations on the child, enjoy 😉

    You will need to do a personal audit, and calculate your outgoings per month.

    Try to accommodate and create a realistic budget.

    Moreover, you will need to accept that you will probably won’t be savings much after your child is born.

    You probably will need to create an emergency fund from your savings (set aside at market rate). For the rest, just accept that you will need to spend this from time to time.

    Buying a house is a difficult question, it depends on the deposit (classic bank of mum & dad). If you don’t have this, you might be stuck until your partner returns to work

  • gratinbad

    Renting is at the moment cheaper then having your capital locked in a residential property in NZ. Even when you don’t have a mortgage, money you could sell your house for would possibly bear you an interest that after tax would be higher than costs of renting the same house.
    If you have to have a mortgage, the costs of mortgage (the interest) and the lack of interest on your deposit, plus rates and maintenance can be greatly higher than rent.

    https://www.stuff.co.nz/business/money/300954755/mortgage-twice-as-pricey-as-rent-does-buying-still-make-sense

  • gooners345

    It’s always better to own, always. I think you know this though, so you want to know how you can buy a house quicker?

    The properties you are looking at, are they similar to what you are living in now? What if you choose a location further away, or a worse quality house just to get on the property ladder?

  • terriblespellr

    What happens when your landlord or property manager finds you’ve had a baby and is angry you didn’t beg for permission?

    On 100k you should be able to afford something somewhere

  • Main-comp1234

    What does emergency funds mean? is that going into the deposit like all the savings?

    >assume will be halved once baby is born

    Even if that remains at 100% best you are going to do is buying a townhouse.

    At half there is 0 chance you can maintain mortgage repayments with hardly any deposit

    If you are in Auckland and planning to buy an actual house then you can just let it go.
    You don’t have enough money to buy a house.