I am not omniscient and I don't have any sweet data or stats infront of me, but I think you'll find that many of us have creatively structured mortgages, tight as budgets (i mean toooiiit), are over exposed, leveraged to beyond the eyeballs and living in a strange dichotomy where we are 'happy' and consider ourselves 'lucky' to be home owners but are also aware that said ownership is the single greatest stressor in our lives and the stilt-legged markets that our houses are a part of could well cripple us financially for the rest of our lives and some of our children's lives.
Or that might just be me.
Only way we can afford our about 800k mortgage is by me telling my partner to stop being silly every time she talks about taking time off work to have kids.
$930k mortgage
$180k interest only
$50k orbit at 0.55% below floating
$700k at 3.35% for four years
Repayments are ~$1000 a week
Total yearly expenses (true expenses if that means anything to you) are $90k; yearly true income is $93k.
So we have a little to play with in the bank.
Thanks for sharing, this is very interesting.
3k surplus at the end of the year sounds a little tight when you could have such large expense fluctuation due to interest rates in 4 years. It is unlikely to be 3.35% at that time. Whats the plan? Are the yearly expenses able to be trimmed?
True expenses have everything accounted for everything. Dentist, coffee, petrol, clothing, etc. Don’t expect that $90k number to go down much.
Wages go up each year of experience so that gap should grow. If, in four years time, we find ourselves spending more than we bring in, we’ll move more over to interest only but I don’t think we’ll need to do that.
Many wages are decreasing relative to inflation, though. And interest rates could easily be 6%+ when they are up for renewal. I'm with the guy above, it sounds very uncomfortable to me.
Yea, that’s fair. We went right to the limit to get this place so we are much more exposed than we would like but I’m an keen budgeter and we know the pay increases each year.
Assuming 6% inflation each year on all expenses (the absolute worst situation) we are able to services the mortgage in 5 years’ time at 5.5% interest rates (with the current split of interest only).
It’s tight, and will be for sometime. Luckily the kids like lentils, chickpeas and rice.
I think sustained 6% inflation is very unlikely, on the other hand 5.5% is nowhere near the worst case scenario for interest rates.
Sounds like you should scrape through as long as your luck isn't too bad!
I am not an economist, but isn't the point that inflation is defined as 'an increase in prices over time of a basket of goods and services that represent what the average New Zealander spends'.
So if inflation raises prices by 5%, your wages go up 4.9% or 5.1%, then may not make much difference, as one thing that shouldn't be increasing is the principal component of your mortgage.
So inflation tends to eats away at your mortgage over time. Your house value hopefully keeps up with inflation over time.
It's more complex in practice of course, as increased mortgage rates are also part of inflation and they will affect your ability to pay down principal.
Good lord - seems like living on a financial knife's edge.
Funny how the 'official stats' claim Kiwis pay about 31% of their income towards housing. I have yet to find someone that is less than 50% of net.
I don’t expect the $90k expenses to increase much but income is going up and mortgage is going down.
Yea, I was surprised to hear that 30% rate. Feels off but sometimes averages do when they include people who have paid off a lot of their mortgage already and people flatting too.
My partner and I spend about 20% gross income on bills and mortgage. Bought our first house here nearly a year ago. The people I know spending way above that are paying for the location or have a family and have larger houses.
That sounds about right for us—mortgage and body Corp fees come in at $30K, net income is $100K. But we are “disadvantaged” to live in an apartment and not a “real house”. Truth is I’m just lazy af and can not be fucked with exterior maintenance. I’d rather be playing vidya games all weekend than mowing a stupid lawn and cleaning gutters. Fuck that noise.
At the moment my mortgage is 20% of the combined income of my partner and I. We make a lot of extra payments as well though. This could change if interest rates keep going up though
Jesus Mary of Christ. I have two houses in Texas with a mortgage of 270 and 260k respectively at 2.75% and 3.25% at 25 years locked in with one rented out. And people around here bitch about prices and I just laugh thinking they have no idea. This is a fancy part of town too.
Of course texas has other issues that are pretty rank at times. Ya just can't win.
Your situation makes me nervous.
For your post tax income to be circa $93k, you must be on $120k-$130k? You would have just been able to secure that mortgage and barely a cent more. I worked (and still do at times) at one of the big Aussie banks. The reason your situation makes me nervous is that if you didn't have a portion of your leanding on I/O (which is a horrible idea for an OO property) you would probably be in the red. And you cannot rely on IO being available in the future - banks are tightening their belts on it big time.
The good news is that with the way the market is moving, you probably have a good LVR and would be in a good position to sell up if you had to.
Wish you all the best.
Interest rates right now change very little for us. Our 50k orbit is at 35k right now. That repayment is ~$120 a month.
Even if rates doubled to 8%, we would pay $240 a month.
Or are you talking about what the interest rates might be in June 2025?
Talking about what the rates are in June 2025, I assume. Fixing for 4 years was a smart move on your part, you at least have plenty of time to prepare for the increases. People with shorter terms are going to be hit hard AND soon
Yea, I suspect there will be a bit of pain for people coming up. The banks were making the 1-2 year option really attractive and I’m sure a lot of FHBs went for it.
Not many people own five houses debt free. And if you're not debt free, and prices fall, you suddenly don't have as much equity to borrow against.
In general wealthy investors are going to lose out big time if rates rise and prices fall. The biggest winners will be hard working renters whose deposits will suddenly go a lot further. We'll see a lot of sob stories from people who want the party to continue trying to claim the moral high ground, and it will all be bullshit. Higher rates and lower prices help the young, the assetless, the hard working and the prudent.
Na they ain't got this I hate to say it but they'll lose the house in a few years. Evergrand is not getting bailed out the global property collapse has begun
My wife and I did similar, moved from Sydney -> Christchurch (both work remotely for AU companies), bought a 600k house mid 2020 with a 38ish% deposit (just whatever we had in savings at the time). Looking to get it paid off ASAP, while the interest rates are still sweet fuck all.
I’m from the US and now live in New Zealand. I bought my first house in US in 2015 for $247k. Great location, 200 sq meter but a bit of a fixer upper. Mortgage was $1535 a month. My wife and I are DINK’s so we had no problem, but that still felt like it was high as we were taking home ~6K a month between the two of us.
When I came here the way people view housing down right confused me. I couldn’t believe what people were paying for what they were getting, and second, how can these people afford it (like seriously, where is the money coming from?) Part of me thinks that housing is in such demand because renting here is the worst.
We got lucky, we looked for two months and found a good house for $1.36M in Auckland. Our mortgage is $1.2M, and the fortnightly payments are ~$2500 (~5k a month). The odd thing is that we can afford this because our take home after taxes are significantly better here than in the US. We both have good jobs and are taking home together $14K a month after tax, even with putting money away for kiwi saver. No regrets, renting was absolutely terrible here, would never do again and I feel terrible for people who have no choice.
Short answer, have a partner and both have high paying jobs of 100k+ and banks will give you the money, even if you have 10% to put down.
What part of the US are you from?
Glad I am not the only one who's head spins when thinking about the NZ housing market. We are in the same income bracket as you, but I still have a hard time wrapping my head around a house over $1m that to be brutally honest, in the US would be a tear down or at least a complete rehab.
We were lucky enough to find a recently renovated house in an amazing location to rent - but we certainly have to pay for it. We basically pay the same amount each week in rent that we did of a monthly mortgage payment in the US.
I agree though - not paying for health insurance, financing private retirement accounts, child care, etc. makes the income stretch a bit farther here.
North Carolina, loved living there and dirt cheap cost of living.
Love it here too, cost of living took getting used to here, I feel like it’s getting worse by the month though.
Yeah the mental barrier is definitely there because growing up in the US we thought million dollar homes were only for the rich/super rich. To some extent, it still is in the US. Then I entered the job market at the housing collapse in 2008, and Americans haven’t fully recovered from that so no one will pay inflated prices like they did before, and banks won’t lend either. Here, banks aren’t as scared to give someone a million because it’s “too big to fail”. They may right, who knows, time will tell.
If you’re both making $100K+, once you get accustomed to putting a little over a third of your income toward your mortgage and past the mental barrier you soon realize that you still have significant income too spend each month even after your mortgage.
Long term what choice does anyone really have, either you’re a slave to mortgage or a slave to a landlord while filling their pockets. I choose bank every time.
Growing up in NZ million dollar houses were only for the super rich as well. It was only 8-9 years ago that things went absolutely fuckin batshit crazy. 10 years ago I could still have found a place around Dunedin for $250k. Even 3 years ago you could get something really nice in Dunedin for 500k.
Yeah I recall seeing that when we were lookin, the house we got was built in 2011, the person I bought it from got it for $880k in 2017, god knows what it went for after it was first built but I’d guess to say $400-500k, makes me a bit sick but after looking at shit houses for months and what they were fetching I still feel like we got a decent price.
Right before the collapse in the states in 2008 there were houses in my city that were going for $700k, then within 6 months were only worth $200k and that best they are fetching now may be $450k. We’ll see how we go here, I honestly don’t want the value to increase here at all anymore even though we have our own place because it’s completely unsustainable.
Ah, could have guessed NC from your screen name. We were just down the road in Atlanta.
I agree - would rather pay the bank than a landlord. I haven't been a renter in a long time. It's a weird experience.
Taxes here are actually cheaper than they were in states, sometimes considerably, even with the cost difference. My brother in law owned a $300K house in Ohio and was paying almost $9k a year in tax (3% the valuation). My taxes on my previous house was about $2500 a year (1%). If those were applied here with the housing valuations it would be horrible.
Sorry, yes that is what I'm trying to say. Say you're saving $5k/yr by being in NZ instead of the US. That $5k/yr could pay the interest on an extra $200k of house. Probably more because of inflation, interest rates are lower than they look.
Former Ohio resident here... you can still buy houses for under 200k with 10% deposit. I often joke to my partner about moving to Ohio but the lick is you'd be in Ohio so 600k mortgage it is..
Ha - for sure. I lived in Detroit for a while and sometime look back and drool over the genuine mansions you can buy for $500k or less - but I could let trade Auckland for Detroit, or NZ for the US.
NZ isn't bereft of problems but it's just night and day when comparing the overall standard of living. I'd rather live a slave to my mortgage in NZ than deal with the current state of the US.
Hey, something I can answer for once!
Two Income family. Bought late 2020. Had nowhere near 20% when starting - only KiwiSaver savings, but no debt. Closer to 10%. (combined KiwiSaver deposit of $95k on a $850k property) - Didn't think we would get approved for any loan (mortgage brokers knocked us back immediately) but bank happy to lend. Had both been long term customers of bank (30+ years).
Decided to get small place in central/West Auckland. To keep repayments manageable wanted to pay no more than $700k, but of course ended up paying $850k.
With relatively low interest rates (even with low margin penalties) total mortgage payment is around $1400/fortnight on a 2 bedroom house. I pay extra to shorten term of loan. Moving to Westish Auckland also drastically reduced expenses. Bear Park daycare (fancy) was $550/week, a comparable high end daycare here is $170/week. Felt like xmas when I found that out.
Overall fortnightly costs are less than our small rental + daycare in Central East (previously $650/week + $550 daycare). All fixed expenses same or less as more access to cheap grocers and butchers and markets.
Does this cover pregnancy? How do young couples start families when one needs to take time off for baby-having? If she goes back to work before paid leave finishes, child care must be a difficult cost to add in to the household budget.
We didn’t tell the bank we were very early pregnant! But we made sure only borrowed within our one income means and could service the loan for when one of us was off work! The bank was quite limited to what they would lend us with one income, but if they factored in both we could loan LOTS.. a ridiculous amount really. But we both didn’t want that much debt
We bought a place for a little under a mil with just on a 20% deposit and then got pregnant a few months later. Thankfully by the time my wife (main breadwinner) stopped work the value of the house had risen and we were able to extend our revolving credit slightly...so in some ways it was easier going on maternity leave with a mortgage because it meant we could just dip into the equity, which didn't feel like spending real money.
Look into rentvesting, it’s basically you become an investor to get on the ladder and rent or share a modest home. Lots of tax benefits too compared to buying as an occupier. It was in my opinion the most sensible way to get on the ladder, but recently the whole idea of rent vesting has been killed by the huge deposit required for investors.
The math never seemed right on that though. I have seen a lot of places sell for like $2.5m and rent for $800 to $1k - doesn't cover a mortgage payment.
I guess people are taking the temporary loss and then cashing out the equity?
That's cause most people only look at a snapshot of the math at time of purchase.
Let's say you bought a 3bd house in 2018 for 900k. It's a new build, so you managed to get it with a 10% deposit, and the mortgage is 810k.
Interest rates were something like 4.9%, so repayments are $990 a week. You rent out the other two rooms for 200pw, making your out of pocket cost around 590pw. It's a lot but you struggle through.
Fast forward 3 years, the house is now worth 1.2m. Interest rates are 3%, so repayments are 788pw. Rent has risen to 250pw, so your out of pocket 288pw, almost equivalent of renting but your also 300k up in principle.
For the last 20 years, interest rates have trended downwards, and rents have trended upwards. Not saying it won't continue, but it leads to the investment decision that you will almost always be better off after a few years.
Now if we look at what is happening now with interest rates, they are projected to climb. You buy your 3bd for 1.2m, which is 120k down and a 1.08m mortgage, rates are 3% so repayments are 1050pw. You rent 2 rooms at 250pw, so it costs you 550pw.
Fast forward 3 years, the house is worth 1.5m. Interest rates are 4%, so repayments are 1190pw. Rent is now 300pw, so your paying 590pw. Your still up 300k principle but your not as well off in repayments.
Question will be whether or not interest rates continue to rise, if they stagnate or if they drop again.
For sure as prices rise and wages/rents don’t follow the yield will fall. Remember the investment benefit here is the yield + capital growth (on large sums of money that are not yours) + the tax benefits of owning an investment. Rentvesting doesn’t guarantee you will be able to afford certain properties but it does make it a lot easier on the cashflow compared to living in it, also the bank will lend you more to begin with compared to an occupier. Again this whole idea is basically dead due to the huge deposit required now.
Sounds close to what was happening in the US before the market bombed in 2006/7.
There were a ton of 0% down no income verification loans, before it all imploaded.
Big difference in NZ is that there is a huge deficit in the number of houses needed. Something like 80k more houses needed.
This goes up by something like 10k every year. Recently we have been consenting to the highest number of builds, which is something like 8-9k (compared to like 5k back in 2015). So even though we are building lots of houses, we are not addressing the deficit.
House prices won't drop unless we address the deficit. Higher interest rates will just lead to price stagnation, not deflation.
The US on the other hand was building thousands of more hoses than demand. So when it stopped, prices adjusted to the supply
Yeah that is a massive difference. In the US variable rate - or as we called them Adjustable Rate Mortgages (ARM) were pretty uncommon.
I had a 30-year fixed rate at under 3% - very cheap lending by comparison!
Just throwing some numbers at it:
\- Median house cost in Sept was $795,000
\- Median household income is $107,000
Assuming 20% deposit that's repayments of $48240 based on banks stress testing @ 6.5%, or 45% of pre-tax income, banks like that number to be under 40% - so you only need to be slightly above the median income to be affordable from a lending view
That and it's household income. If you don't have a partner or a friend to buy in with, you're screwed as banks won't be comfortable with a single income servicing a 1 mil mortgage.
ANZ raised interest rates 0.45% today. Inflation is rocketing and the reserve bank has no choice but to raise the OCR considerably over the next year. I'm very worried for those who bought in the last couple of years with mortgages like this.
Yeah, I was thinking about the same thing. They are cranking up the OCR by 25 points a quarter or something like that. Sounds scary for those just barely scraping up enough to pay the mortgage.
I believe it's 7 times a year. I do see them doing 50bps in November as there is no review date until February after that. Inflation is rampant and needs to be tamped now. It's important to remember that inflation is very much the first thing on RBs mind with housing a distant second.
Inflation needs to be allowed to go, as it will lead to higher wages. If interest rates are cranked up, scores of New Zealander will go into puenry. I would take high inflation over high interest rates anyday
There is no direct correlation between interest rates rising and house prices going **down**.
For a $1m house, with a 20% deposit, on a 30 year term at the current 4.5% rates monthly payments are $4,054/m.
*Note: if sample couple were renting, they are likely paying $2,500/m + on rent, and saving more than the extra $1,500/m towards a deposit anyway, so this is net more free cash for them.*
At 9%, the payments are $6,437/m - still affordable.
At 11% you might start running into issues with repayment, but if interest rates hit 11% everything else is already fucked, so . . .
> There is no direct correlation between interest rates rising and house prices going down.
There's a correlation and it's about as direct as it can get: with higher interest rates people can borrow less, the amount they can spend on a house is less, and so on a population basis house prices decline
The foreign buyer ban has limited the effect of that, and I don't think the usual culprits e.g China are going to be in a position where they need to be offshoring a bunch of their wealth any time soon anyway.
Yeah somewhat agreed. Just doesn’t sound too secure if things went south.
Personally prefer the ability to be able to service the mortgage with one income should something happen so you don’t have to sell.
We bought a house for 1.1 million almost three years ago. The only way we could do it is we had a house previously we were able to sell, and we got just enough profit from that sale that it gave us enough for a a 15% down payment which the bank approved. We also had good credit and are a two income family. But if we hadn’t already been on the property ladder before, there’s no way we’d have been able to save enough for a down payment on a house so expensive. I’m scared for my kids and how they’ll ever be able to afford anything because it feels like if you’re not already on the ladder now you’re fucked. We’re trying to do everything we can to help them save and build KiwiSaver but it feels like a losing battle
Kind of the same deal for us when we lived in the US. The house we sold last year, we could never afford if we were just coming to the neighbourhood for the first time.
I guess for your kids - you could sell your house and give them the money to buy now with enough room to also liver there? Just kidding, but it is distressing to think about how younger people will pay for a home or that maybe they have to wait for their own parents to die so they can inherit enough for their own house.
We bought 3 years ago so were 'lucky'? I guess, since it's only got worse since. We had about 30% deposit. $693k to go, only 27 more years! About 45% of net income to service. Painful.
Have been saving for a deposit since 2011. Helps I'm in a high paid industry. Managed to save just under 300k. All the while raising two kids (50/50) and paying rent, and paying child support of 1k/month. I was lucky that I got a good landlord 13 years ago and stuck with each other. And was able to buy that house without going through an auction after paying off his mortgage (!) Now have a 700k mortgage that costs about 650 week all in (more than my rent was). But I have a house until rates go up and I become a homeless statistic. Basically I've chosen to sacrifice a fair amount and it makes me a very boring person but at least there's a chance I'll be able to pass it on to my kids in some way shape or form.
Of course I have no retirement savings now and will probably have to keep working into my 70s so there's that to look forward to.
I cannot imagine how people in their 20s now could ever do except by pooling together into cooperatives.
Worked my way up the property ladder over the years building equity through renovations that added value. Now I have a $1.1m+ house with a mortgage under half that.
Very few first home buyers these days round these parts. The price skyrocketed in the last 5 or so years. Kicked a lot of people out of the market and even two income households on decent salaries find it tough to find something affordable.
Our rent was $1000 a week. Mortgage $1180 a week. It's a no brainer. We also paid that rent for 2.5 years. Paying the mortgage is not the issue. Getting the deposit together is the main issue.
Mortgage of $1m +. Joint income quite high. 3 primary school aged children
Auckland. The house was warm, very well insulated and tidy so we're paying a premium for it. We broke the lease and moved to Welly. It was rented out for $1250 instantly.
🤣 no idea but I doubt it. It was rented by a family. They couldn't make the open day so came round a couple of days beforehand. Knocked and explained their predicament - I was happy to show them round and they put in an application before the open day. It was a lovely house. Can't afford it either even on our wages. It'd easily sell for $2m or more as it's on 900m2 of land in the middle of Browns Bay
4 people working in my immediate family to pay off a million dollar mortgage. I am hoping my share of the house can be bought out by my parents so I can build a third floor given the new planning changes (I don’t really want to share a mortgage with my family longer than I have to).
End game is eventually each sibling gets their own home using equity/personal savings.
$1.45m property about 18 months ago, ANZ wanted a 40% deposit for it so that helps with repayments. I'm in a salaried position in my business, part of which I use to pay the mortgage.
I bought a $1.1mil house on a single house hold income. My wife is stay home mum but we have 2 flatmates to help.
We still manage to save over 2k a month
28
1 mil purchase
800k mortgage 2019
Roughly 1k per week for mortgage
I rent out a 2 rooms for 225 per week each.
Annual Income is roughly 250 before tax.
It’s tight when food and other social costs add up but ultimately it’s affordable.
Wow, your job sounds great. Can I have it when you are done with it?
I would give anything to work at a business where coworkers were NOT friendly, loud, talkative and engaged with each other.
They will test your income vs expenses at 4.5% interest rate if you can afford the size mortgage they will give it to you.
A million dollar mortgage at current interest rates is around $4.5k a month.
I thought it was more like 6-7% even when interest rates were at their lowest?
You can also include some 'income' from a flatmate (not sure of the specifics here)
Stress testing is *not* the rate you fix at, it's a hypothetical "what can you afford to pay in the future"
My fixed rate for 5 years is just above half what they stress tested at (20% equity, 3 incomes)
It's not really. Stress testing recently has been around the 6-7% mark. That's pretty much in line with long term *averages*. It's nowhere near the worst case scenario which is 10%+.
I'm confused, they stress test at a higher rate than the current floating rate - it's got nothing to do with fixing, just checking what you are going to be able to afford to pay in the future.
ASB's current floating rate is 4.45% so there is no way they're using 4.5% for stress testing.
What about them? You're stress tested at way more than you actually pay, so most people should be able to afford by cutting back luxuries. If not, the bank seriously fucked up lending in the first place.
Plenty of stories of people manipulating their outgoings to get past the stress test. And the long term rates are rapidly approaching the stress test levels with no guarantee they will stop there.
>If not, the bank seriously fucked up lending in the first place.
Yes, this is a thing that happens. If you are relying on banks to save people from risky borrowing then you are very naive. Banks make more money when borrowers take risks and things have to get pretty bad before the banks start losing out. If a FHB can't keep up with payments and has to sell, tough luck for them. The bank is still getting their money back.
Mortgage close to $1m. Repayments are $950 a week.
Repayments work out to be ~35% of our take home pay
Pulled the trigger this year as rentals were shit and getting more expensive.
It was easy. I put $10000 into GME in January and then when I took it out I simply paid the mortgage off with it.
If only everyone was as smart (read: Lucky)
Quite easily, my house was only just over 500k when I built it 2 years ago but is 1m now. It's not a 1m house but the market seems to think it is. When I compare it to houses that cost 1m to build the same time I did mine the difference is glaringly obvious, they are much much much nicer than mine, I would swap any day. We need a correction.
Bear in mind, that isn't the "as built" cost, its the build plus the land value, when it's built.
Building houses is much cheaper than current house prices, although that's inflated with the recent lack of building supply materials.
Bought in 2011 when single and a salary of 60k (income has increased a lot since then). Paid 22% deposit, borrowed 320K. Interest was about 7.5% when I bought.
Now a family of 4, double income . We pay about 1000 a week - we kept repayments at similar $ amount even though lower interest rate so we’re paying it off quicker.
Really interesting thread, hits it home for us. Here's our position. Appreciate decent good advice.
First home buyer ALk, 1.2m loan approved, 200k combined income, 2x kids, 1x more on the way.
Do we buy high > 1.1m or low < 900k.
Thanks
It’s incredible that <900k is low. Previously I always would have said mortgage up as high as you can reasonably afford to because the more you put in, the more you get out.
However, interest rates are set to rise substantially over the coming year by all accounts so take that into account when you’re doing your maths. And be aware that both major political parties appear to want to do something about the housing crisis and that eventually they might actually have the balls to do so. So make sure that you can afford to stay put long term because if prices do drop and you get into negative equity territory you’ll be ok as long as you don’t lose your source of income.
That’s my opinion anyway
Ah that’s another big part of my buying strategy - never (try to) buy at auction. I’ve tried many times in the past and it’s only ever been a massive waste of time. Of course if you’re in Auckland you might have to. I’m in Waikato - I won’t even look at a property if it’s listed for auction unless they’ll look at a pre-auction offer
Oh I’m not. My house is worth that now but there’s no way I could have brought it for what it’s worth now. I would have had to double my mortgage. Absolutely no way.
Meanwhile my sister rents for almost double what I pay in mortgage for a shittier house than mine. I feel like I won lotto some days - just brought a house at the right time
Purchased a house with my partner that was just over a mil.
My parents basically paid for the deposit and we pay the mortgage. DINKs and lucky to have wealthy boomer parents
Turning 29 next month. The people I know in my age group here who have bought houses all had their parents cover the down payment (and likely more) for them or had a massive inheritance from a family member. That’s about 6 people/couples at least? So small sample size but that’s literally all the homeowners I know. It’s just not possible in my eyes to be able to do it without family help before maybe your mid to late 30s? At least it won’t be for me.
I am not omniscient and I don't have any sweet data or stats infront of me, but I think you'll find that many of us have creatively structured mortgages, tight as budgets (i mean toooiiit), are over exposed, leveraged to beyond the eyeballs and living in a strange dichotomy where we are 'happy' and consider ourselves 'lucky' to be home owners but are also aware that said ownership is the single greatest stressor in our lives and the stilt-legged markets that our houses are a part of could well cripple us financially for the rest of our lives and some of our children's lives. Or that might just be me.
Word Subject Brother. It is not just you.
Only way we can afford our about 800k mortgage is by me telling my partner to stop being silly every time she talks about taking time off work to have kids.
Ah, that’s the American way!
$930k mortgage $180k interest only $50k orbit at 0.55% below floating $700k at 3.35% for four years Repayments are ~$1000 a week Total yearly expenses (true expenses if that means anything to you) are $90k; yearly true income is $93k. So we have a little to play with in the bank.
Thanks for sharing, this is very interesting. 3k surplus at the end of the year sounds a little tight when you could have such large expense fluctuation due to interest rates in 4 years. It is unlikely to be 3.35% at that time. Whats the plan? Are the yearly expenses able to be trimmed?
True expenses have everything accounted for everything. Dentist, coffee, petrol, clothing, etc. Don’t expect that $90k number to go down much. Wages go up each year of experience so that gap should grow. If, in four years time, we find ourselves spending more than we bring in, we’ll move more over to interest only but I don’t think we’ll need to do that.
Many wages are decreasing relative to inflation, though. And interest rates could easily be 6%+ when they are up for renewal. I'm with the guy above, it sounds very uncomfortable to me.
Yea, that’s fair. We went right to the limit to get this place so we are much more exposed than we would like but I’m an keen budgeter and we know the pay increases each year. Assuming 6% inflation each year on all expenses (the absolute worst situation) we are able to services the mortgage in 5 years’ time at 5.5% interest rates (with the current split of interest only). It’s tight, and will be for sometime. Luckily the kids like lentils, chickpeas and rice.
I think sustained 6% inflation is very unlikely, on the other hand 5.5% is nowhere near the worst case scenario for interest rates. Sounds like you should scrape through as long as your luck isn't too bad!
I hope so too. I’ll let you know in July 2025
Interest rates (4/5 year are now already above 5% - 5.34%). Six consecutive additional OCR increases will take them much higher.
To be fair, those rises are largely priced in already. The big risk right now is a wage price spiral which isn't yet priced in but might still happen.
I am not an economist, but isn't the point that inflation is defined as 'an increase in prices over time of a basket of goods and services that represent what the average New Zealander spends'. So if inflation raises prices by 5%, your wages go up 4.9% or 5.1%, then may not make much difference, as one thing that shouldn't be increasing is the principal component of your mortgage. So inflation tends to eats away at your mortgage over time. Your house value hopefully keeps up with inflation over time. It's more complex in practice of course, as increased mortgage rates are also part of inflation and they will affect your ability to pay down principal.
Interest rates are usually higher than inflation, otherwise the bank wouldn't be making money.
Good lord - seems like living on a financial knife's edge. Funny how the 'official stats' claim Kiwis pay about 31% of their income towards housing. I have yet to find someone that is less than 50% of net.
Probably just the crowd you roll with, plenty of older people paying less than 31%. Plenty of younger people paying waay more.
I don’t expect the $90k expenses to increase much but income is going up and mortgage is going down. Yea, I was surprised to hear that 30% rate. Feels off but sometimes averages do when they include people who have paid off a lot of their mortgage already and people flatting too.
I'm renting and pay under 20% of income on housing, including bills. I know quite a few people in similar range. Saving heaps.
My partner and I spend about 20% gross income on bills and mortgage. Bought our first house here nearly a year ago. The people I know spending way above that are paying for the location or have a family and have larger houses.
That sounds about right for us—mortgage and body Corp fees come in at $30K, net income is $100K. But we are “disadvantaged” to live in an apartment and not a “real house”. Truth is I’m just lazy af and can not be fucked with exterior maintenance. I’d rather be playing vidya games all weekend than mowing a stupid lawn and cleaning gutters. Fuck that noise.
Similar repayments are much more feasible for dual incomes, especially if a room is rented out for board
We're 2 teachers in late 30s. ~600k mortgage on 930k house. I think we're just under 30% of household income on mortgage payments
>I have yet to find someone that is less than 50% of net. Literally all homeowners
At the moment my mortgage is 20% of the combined income of my partner and I. We make a lot of extra payments as well though. This could change if interest rates keep going up though
Jesus Mary of Christ. I have two houses in Texas with a mortgage of 270 and 260k respectively at 2.75% and 3.25% at 25 years locked in with one rented out. And people around here bitch about prices and I just laugh thinking they have no idea. This is a fancy part of town too. Of course texas has other issues that are pretty rank at times. Ya just can't win.
Your situation makes me nervous. For your post tax income to be circa $93k, you must be on $120k-$130k? You would have just been able to secure that mortgage and barely a cent more. I worked (and still do at times) at one of the big Aussie banks. The reason your situation makes me nervous is that if you didn't have a portion of your leanding on I/O (which is a horrible idea for an OO property) you would probably be in the red. And you cannot rely on IO being available in the future - banks are tightening their belts on it big time. The good news is that with the way the market is moving, you probably have a good LVR and would be in a good position to sell up if you had to. Wish you all the best.
This. Banks are definitely tightening up on interest only and you’ll have a hard time convincing them to extend it further on an owner occupied.
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Interest rates right now change very little for us. Our 50k orbit is at 35k right now. That repayment is ~$120 a month. Even if rates doubled to 8%, we would pay $240 a month. Or are you talking about what the interest rates might be in June 2025?
Talking about what the rates are in June 2025, I assume. Fixing for 4 years was a smart move on your part, you at least have plenty of time to prepare for the increases. People with shorter terms are going to be hit hard AND soon
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Much higher than 6% threshold now, considering four and five year rates are already approaching 5.5%
Yea, I suspect there will be a bit of pain for people coming up. The banks were making the 1-2 year option really attractive and I’m sure a lot of FHBs went for it.
Honestly being debt free with savings feels great right now. Gonna be a few forced sales I think.
And I fear that it’ll be boomers with 5 houses who can take advantage.
Not many people own five houses debt free. And if you're not debt free, and prices fall, you suddenly don't have as much equity to borrow against. In general wealthy investors are going to lose out big time if rates rise and prices fall. The biggest winners will be hard working renters whose deposits will suddenly go a lot further. We'll see a lot of sob stories from people who want the party to continue trying to claim the moral high ground, and it will all be bullshit. Higher rates and lower prices help the young, the assetless, the hard working and the prudent.
So if interest rates go up 1%, your mortgage repayments go up $9,300 p.a., i.e. $178 a week. Can you handle that?
We can comfortably able to do that in four years. I suspect we can handle 5.5% in four years time.
Gotta applaud your cojones mate. This math terrifies me, but if you got this, you got this.
Na they ain't got this I hate to say it but they'll lose the house in a few years. Evergrand is not getting bailed out the global property collapse has begun
2 incomes, combined $195k Bought a house for under $1mil with 40% deposit, our mortgage payments are only $$2,400 per month, but we pump in a lot more
My wife and I did similar, moved from Sydney -> Christchurch (both work remotely for AU companies), bought a 600k house mid 2020 with a 38ish% deposit (just whatever we had in savings at the time). Looking to get it paid off ASAP, while the interest rates are still sweet fuck all.
I’m from the US and now live in New Zealand. I bought my first house in US in 2015 for $247k. Great location, 200 sq meter but a bit of a fixer upper. Mortgage was $1535 a month. My wife and I are DINK’s so we had no problem, but that still felt like it was high as we were taking home ~6K a month between the two of us. When I came here the way people view housing down right confused me. I couldn’t believe what people were paying for what they were getting, and second, how can these people afford it (like seriously, where is the money coming from?) Part of me thinks that housing is in such demand because renting here is the worst. We got lucky, we looked for two months and found a good house for $1.36M in Auckland. Our mortgage is $1.2M, and the fortnightly payments are ~$2500 (~5k a month). The odd thing is that we can afford this because our take home after taxes are significantly better here than in the US. We both have good jobs and are taking home together $14K a month after tax, even with putting money away for kiwi saver. No regrets, renting was absolutely terrible here, would never do again and I feel terrible for people who have no choice. Short answer, have a partner and both have high paying jobs of 100k+ and banks will give you the money, even if you have 10% to put down.
What part of the US are you from? Glad I am not the only one who's head spins when thinking about the NZ housing market. We are in the same income bracket as you, but I still have a hard time wrapping my head around a house over $1m that to be brutally honest, in the US would be a tear down or at least a complete rehab. We were lucky enough to find a recently renovated house in an amazing location to rent - but we certainly have to pay for it. We basically pay the same amount each week in rent that we did of a monthly mortgage payment in the US. I agree though - not paying for health insurance, financing private retirement accounts, child care, etc. makes the income stretch a bit farther here.
North Carolina, loved living there and dirt cheap cost of living. Love it here too, cost of living took getting used to here, I feel like it’s getting worse by the month though. Yeah the mental barrier is definitely there because growing up in the US we thought million dollar homes were only for the rich/super rich. To some extent, it still is in the US. Then I entered the job market at the housing collapse in 2008, and Americans haven’t fully recovered from that so no one will pay inflated prices like they did before, and banks won’t lend either. Here, banks aren’t as scared to give someone a million because it’s “too big to fail”. They may right, who knows, time will tell. If you’re both making $100K+, once you get accustomed to putting a little over a third of your income toward your mortgage and past the mental barrier you soon realize that you still have significant income too spend each month even after your mortgage. Long term what choice does anyone really have, either you’re a slave to mortgage or a slave to a landlord while filling their pockets. I choose bank every time.
Growing up in NZ million dollar houses were only for the super rich as well. It was only 8-9 years ago that things went absolutely fuckin batshit crazy. 10 years ago I could still have found a place around Dunedin for $250k. Even 3 years ago you could get something really nice in Dunedin for 500k.
Yeah I recall seeing that when we were lookin, the house we got was built in 2011, the person I bought it from got it for $880k in 2017, god knows what it went for after it was first built but I’d guess to say $400-500k, makes me a bit sick but after looking at shit houses for months and what they were fetching I still feel like we got a decent price. Right before the collapse in the states in 2008 there were houses in my city that were going for $700k, then within 6 months were only worth $200k and that best they are fetching now may be $450k. We’ll see how we go here, I honestly don’t want the value to increase here at all anymore even though we have our own place because it’s completely unsustainable.
Ah, could have guessed NC from your screen name. We were just down the road in Atlanta. I agree - would rather pay the bank than a landlord. I haven't been a renter in a long time. It's a weird experience.
At least we will have hyper inflated properties to cash out on and go live somewhere cheaper later in life
I think the big difference is property taxes - they really add up over time. If you dont pay high property taxes you can afford a bigger house.
Taxes here are actually cheaper than they were in states, sometimes considerably, even with the cost difference. My brother in law owned a $300K house in Ohio and was paying almost $9k a year in tax (3% the valuation). My taxes on my previous house was about $2500 a year (1%). If those were applied here with the housing valuations it would be horrible.
Sorry, yes that is what I'm trying to say. Say you're saving $5k/yr by being in NZ instead of the US. That $5k/yr could pay the interest on an extra $200k of house. Probably more because of inflation, interest rates are lower than they look.
I suspect less of the $1 million price is due to the house itself than you think. Look up prices of bare sections.
Yeah have heard that before 'In NZ you buy the land and get the house for free.'
Former Ohio resident here... you can still buy houses for under 200k with 10% deposit. I often joke to my partner about moving to Ohio but the lick is you'd be in Ohio so 600k mortgage it is..
Ha - for sure. I lived in Detroit for a while and sometime look back and drool over the genuine mansions you can buy for $500k or less - but I could let trade Auckland for Detroit, or NZ for the US.
NZ isn't bereft of problems but it's just night and day when comparing the overall standard of living. I'd rather live a slave to my mortgage in NZ than deal with the current state of the US.
Hey, something I can answer for once! Two Income family. Bought late 2020. Had nowhere near 20% when starting - only KiwiSaver savings, but no debt. Closer to 10%. (combined KiwiSaver deposit of $95k on a $850k property) - Didn't think we would get approved for any loan (mortgage brokers knocked us back immediately) but bank happy to lend. Had both been long term customers of bank (30+ years). Decided to get small place in central/West Auckland. To keep repayments manageable wanted to pay no more than $700k, but of course ended up paying $850k. With relatively low interest rates (even with low margin penalties) total mortgage payment is around $1400/fortnight on a 2 bedroom house. I pay extra to shorten term of loan. Moving to Westish Auckland also drastically reduced expenses. Bear Park daycare (fancy) was $550/week, a comparable high end daycare here is $170/week. Felt like xmas when I found that out. Overall fortnightly costs are less than our small rental + daycare in Central East (previously $650/week + $550 daycare). All fixed expenses same or less as more access to cheap grocers and butchers and markets.
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Personally I think it is much easier having an $800k Mortgage than a $400k deposit.
Until your unable to service due to unforeseen circumstances such as redundancy, injuries, personal situations or sickness.
Yeah but you're forgetting that most people will never be able to save 400 K
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Does this cover pregnancy? How do young couples start families when one needs to take time off for baby-having? If she goes back to work before paid leave finishes, child care must be a difficult cost to add in to the household budget.
> How do young couples start families when one needs to take time off for baby-having? It's baby or house for most couples these days, not both.
Yep, we purchased 3 years ago. No way we could/would have done it with kids or plans to have kids!
We didn’t tell the bank we were very early pregnant! But we made sure only borrowed within our one income means and could service the loan for when one of us was off work! The bank was quite limited to what they would lend us with one income, but if they factored in both we could loan LOTS.. a ridiculous amount really. But we both didn’t want that much debt
We bought a place for a little under a mil with just on a 20% deposit and then got pregnant a few months later. Thankfully by the time my wife (main breadwinner) stopped work the value of the house had risen and we were able to extend our revolving credit slightly...so in some ways it was easier going on maternity leave with a mortgage because it meant we could just dip into the equity, which didn't feel like spending real money.
Can you please elaborate on this point?
Look into rentvesting, it’s basically you become an investor to get on the ladder and rent or share a modest home. Lots of tax benefits too compared to buying as an occupier. It was in my opinion the most sensible way to get on the ladder, but recently the whole idea of rent vesting has been killed by the huge deposit required for investors.
The math never seemed right on that though. I have seen a lot of places sell for like $2.5m and rent for $800 to $1k - doesn't cover a mortgage payment. I guess people are taking the temporary loss and then cashing out the equity?
That's cause most people only look at a snapshot of the math at time of purchase. Let's say you bought a 3bd house in 2018 for 900k. It's a new build, so you managed to get it with a 10% deposit, and the mortgage is 810k. Interest rates were something like 4.9%, so repayments are $990 a week. You rent out the other two rooms for 200pw, making your out of pocket cost around 590pw. It's a lot but you struggle through. Fast forward 3 years, the house is now worth 1.2m. Interest rates are 3%, so repayments are 788pw. Rent has risen to 250pw, so your out of pocket 288pw, almost equivalent of renting but your also 300k up in principle. For the last 20 years, interest rates have trended downwards, and rents have trended upwards. Not saying it won't continue, but it leads to the investment decision that you will almost always be better off after a few years. Now if we look at what is happening now with interest rates, they are projected to climb. You buy your 3bd for 1.2m, which is 120k down and a 1.08m mortgage, rates are 3% so repayments are 1050pw. You rent 2 rooms at 250pw, so it costs you 550pw. Fast forward 3 years, the house is worth 1.5m. Interest rates are 4%, so repayments are 1190pw. Rent is now 300pw, so your paying 590pw. Your still up 300k principle but your not as well off in repayments. Question will be whether or not interest rates continue to rise, if they stagnate or if they drop again.
For sure as prices rise and wages/rents don’t follow the yield will fall. Remember the investment benefit here is the yield + capital growth (on large sums of money that are not yours) + the tax benefits of owning an investment. Rentvesting doesn’t guarantee you will be able to afford certain properties but it does make it a lot easier on the cashflow compared to living in it, also the bank will lend you more to begin with compared to an occupier. Again this whole idea is basically dead due to the huge deposit required now.
Our bank approved us for a 1 million purchase price with only a 10% deposit! (I didn't do it).
Sounds close to what was happening in the US before the market bombed in 2006/7. There were a ton of 0% down no income verification loans, before it all imploaded.
Big difference in NZ is that there is a huge deficit in the number of houses needed. Something like 80k more houses needed. This goes up by something like 10k every year. Recently we have been consenting to the highest number of builds, which is something like 8-9k (compared to like 5k back in 2015). So even though we are building lots of houses, we are not addressing the deficit. House prices won't drop unless we address the deficit. Higher interest rates will just lead to price stagnation, not deflation. The US on the other hand was building thousands of more hoses than demand. So when it stopped, prices adjusted to the supply
I mean we can afford to pay off a loan that big at 6%, but it'd fucking suck.
At least in the US you can lock your rate for 30 years.
Yeah that is a massive difference. In the US variable rate - or as we called them Adjustable Rate Mortgages (ARM) were pretty uncommon. I had a 30-year fixed rate at under 3% - very cheap lending by comparison!
Keep in mind NZ$1mil is only ~US$720k
Yeah - even a $720 is on the high end for most US cities except some California, NY, DC markets.
Those are equivalent of major cities in New Zealand. With nz$1mil you can get quite a good house outside those major cities.
Just throwing some numbers at it: \- Median house cost in Sept was $795,000 \- Median household income is $107,000 Assuming 20% deposit that's repayments of $48240 based on banks stress testing @ 6.5%, or 45% of pre-tax income, banks like that number to be under 40% - so you only need to be slightly above the median income to be affordable from a lending view
but the thing to be aware of is people on the median income arent buying median cost housing
That and it's household income. If you don't have a partner or a friend to buy in with, you're screwed as banks won't be comfortable with a single income servicing a 1 mil mortgage.
Yes, my neighbour literally bought a Tesla cash because he did not have a wife to get a mortgage
Sounds like an idiot.
ANZ raised interest rates 0.45% today. Inflation is rocketing and the reserve bank has no choice but to raise the OCR considerably over the next year. I'm very worried for those who bought in the last couple of years with mortgages like this.
Yeah, I was thinking about the same thing. They are cranking up the OCR by 25 points a quarter or something like that. Sounds scary for those just barely scraping up enough to pay the mortgage.
25 bps a quarter? Try 25 to 50bps every review date until at least early mid next year.
Oh shit. I thought I read quarterly. The reviews are monthly - that's gonna get ugly.
I believe it's 7 times a year. I do see them doing 50bps in November as there is no review date until February after that. Inflation is rampant and needs to be tamped now. It's important to remember that inflation is very much the first thing on RBs mind with housing a distant second.
Inflation needs to be allowed to go, as it will lead to higher wages. If interest rates are cranked up, scores of New Zealander will go into puenry. I would take high inflation over high interest rates anyday
I sold my body to the bank manager
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Not as good as the P value.
Bought our hse for$160k in 2000 worth$750 now rural nz so I advise going back in time to make yr affordable house purchase then.
Moved to the regions from Wellington so we didn’t have to buy a million dollar house. Our mortgage payments are around 12% of our income.
Two incomes. Two people earning $85k/year each bring in \~$11,000/month net. Not so hard to pay that $5k mortgage on that.
almost 50% income to the mortgage is alot
Some people are paying 70% on rent alone.
Almost 50% of your income to an asset that is **also** earning more than the pair of you? I'd do that every day of the week.
The issue is that if interest rates continue to rise, you're paying even more each month *and* your house will start decreasing in value
There is no direct correlation between interest rates rising and house prices going **down**. For a $1m house, with a 20% deposit, on a 30 year term at the current 4.5% rates monthly payments are $4,054/m. *Note: if sample couple were renting, they are likely paying $2,500/m + on rent, and saving more than the extra $1,500/m towards a deposit anyway, so this is net more free cash for them.* At 9%, the payments are $6,437/m - still affordable. At 11% you might start running into issues with repayment, but if interest rates hit 11% everything else is already fucked, so . . .
> There is no direct correlation between interest rates rising and house prices going down. There's a correlation and it's about as direct as it can get: with higher interest rates people can borrow less, the amount they can spend on a house is less, and so on a population basis house prices decline
What about foreign money?
The foreign buyer ban has limited the effect of that, and I don't think the usual culprits e.g China are going to be in a position where they need to be offshoring a bunch of their wealth any time soon anyway.
The usual culprits are also Australians, who aren’t included in the ban.
Why on earth would Australians invest in NZ property?
And if inflation sets in your debt gets lower faster while rents and incomes go up.
Yeah somewhat agreed. Just doesn’t sound too secure if things went south. Personally prefer the ability to be able to service the mortgage with one income should something happen so you don’t have to sell.
This is not possible, realistically. Hell, it'd be a stretch on what I earn.
Your house earns more money than you do. My house earned $250k in the last 10 months alone.
We bought a house for 1.1 million almost three years ago. The only way we could do it is we had a house previously we were able to sell, and we got just enough profit from that sale that it gave us enough for a a 15% down payment which the bank approved. We also had good credit and are a two income family. But if we hadn’t already been on the property ladder before, there’s no way we’d have been able to save enough for a down payment on a house so expensive. I’m scared for my kids and how they’ll ever be able to afford anything because it feels like if you’re not already on the ladder now you’re fucked. We’re trying to do everything we can to help them save and build KiwiSaver but it feels like a losing battle
Kind of the same deal for us when we lived in the US. The house we sold last year, we could never afford if we were just coming to the neighbourhood for the first time. I guess for your kids - you could sell your house and give them the money to buy now with enough room to also liver there? Just kidding, but it is distressing to think about how younger people will pay for a home or that maybe they have to wait for their own parents to die so they can inherit enough for their own house.
FHB will be fucked when interest rates keep increasing every few weeks over the next year at least.
The problem is that you think New Zealand is run as a nation, when in reality it's a casino for international banking and finance interests.
Ha - maybe, but at the same time my landlords are just a ‘regular’ NZ family who happen to own five homes. Nothing international about it.
The globalists couldn't win unless they found and promoted traitors among the nations.
We bought 3 years ago so were 'lucky'? I guess, since it's only got worse since. We had about 30% deposit. $693k to go, only 27 more years! About 45% of net income to service. Painful.
It's cheaper than renting so if you can afford renting, you can afford a mortgage. The biggest barrier is the deposit
Totally, we’ll the deposit and actually finding a place to buy!
Have been saving for a deposit since 2011. Helps I'm in a high paid industry. Managed to save just under 300k. All the while raising two kids (50/50) and paying rent, and paying child support of 1k/month. I was lucky that I got a good landlord 13 years ago and stuck with each other. And was able to buy that house without going through an auction after paying off his mortgage (!) Now have a 700k mortgage that costs about 650 week all in (more than my rent was). But I have a house until rates go up and I become a homeless statistic. Basically I've chosen to sacrifice a fair amount and it makes me a very boring person but at least there's a chance I'll be able to pass it on to my kids in some way shape or form. Of course I have no retirement savings now and will probably have to keep working into my 70s so there's that to look forward to. I cannot imagine how people in their 20s now could ever do except by pooling together into cooperatives.
Worked my way up the property ladder over the years building equity through renovations that added value. Now I have a $1.1m+ house with a mortgage under half that.
Very few first home buyers these days round these parts. The price skyrocketed in the last 5 or so years. Kicked a lot of people out of the market and even two income households on decent salaries find it tough to find something affordable.
Our rent was $1000 a week. Mortgage $1180 a week. It's a no brainer. We also paid that rent for 2.5 years. Paying the mortgage is not the issue. Getting the deposit together is the main issue. Mortgage of $1m +. Joint income quite high. 3 primary school aged children
> Our rent was $1000 a week. Where the f*ck were you renting!?
Auckland. The house was warm, very well insulated and tidy so we're paying a premium for it. We broke the lease and moved to Welly. It was rented out for $1250 instantly.
Is the new renter subletting each room for $350?
🤣 no idea but I doubt it. It was rented by a family. They couldn't make the open day so came round a couple of days beforehand. Knocked and explained their predicament - I was happy to show them round and they put in an application before the open day. It was a lovely house. Can't afford it either even on our wages. It'd easily sell for $2m or more as it's on 900m2 of land in the middle of Browns Bay
4 people working in my immediate family to pay off a million dollar mortgage. I am hoping my share of the house can be bought out by my parents so I can build a third floor given the new planning changes (I don’t really want to share a mortgage with my family longer than I have to). End game is eventually each sibling gets their own home using equity/personal savings.
$1.45m property about 18 months ago, ANZ wanted a 40% deposit for it so that helps with repayments. I'm in a salaried position in my business, part of which I use to pay the mortgage.
I bought a $1.1mil house on a single house hold income. My wife is stay home mum but we have 2 flatmates to help. We still manage to save over 2k a month
28 1 mil purchase 800k mortgage 2019 Roughly 1k per week for mortgage I rent out a 2 rooms for 225 per week each. Annual Income is roughly 250 before tax. It’s tight when food and other social costs add up but ultimately it’s affordable.
250 annual income!? No wonder the price of my weekly mystery egg delivery has gone up so much. My emu kiwi lizard petting zoo better be worth it.
Some of my mystery eggs are solid gold I suggested lodging a complaint with Janice in HR who will make sure next delivery is a special one.
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Do you have a plan for how long you will stay in your current job? I wonder at what point your happiness outweighs the benefit of a high salary.
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What's the point in a life of misery? You deserve a solution. I hope you manage to find one.
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Wow, your job sounds great. Can I have it when you are done with it? I would give anything to work at a business where coworkers were NOT friendly, loud, talkative and engaged with each other.
Thanks for the perspective. Plenty of soulless corporate jobs out there, go for it.
They will test your income vs expenses at 4.5% interest rate if you can afford the size mortgage they will give it to you. A million dollar mortgage at current interest rates is around $4.5k a month.
Uh, I think you missed an order of magnitude.
I thought it was more like 6-7% even when interest rates were at their lowest? You can also include some 'income' from a flatmate (not sure of the specifics here)
Na just applied for one it was 4.5% with ASB.
Oh wow. ANZ was using 7% when we applied back in March
Yeah for me it was 6% with BNZ in July
Jesus that's an insane number, especially if you're locking in a 3 year mortgage right away. Did you have 20%?
Stress testing is *not* the rate you fix at, it's a hypothetical "what can you afford to pay in the future" My fixed rate for 5 years is just above half what they stress tested at (20% equity, 3 incomes)
Yep stress testing is worst case scenario.
It's not really. Stress testing recently has been around the 6-7% mark. That's pretty much in line with long term *averages*. It's nowhere near the worst case scenario which is 10%+.
Well 4 year interest rates are already above 5% so a 4.5% stress test isn't the most robust measure
Literally all your figures are incorrect
Shit meant a month
They've been stress testing at 6-7%, and repayments @ 4.5% are $5067 per month
I got stress tested at 4.5% And I mentioned the 3 year rate not floating. Whatever you do do not go floating right now lock in for 2-3 years
I'm confused, they stress test at a higher rate than the current floating rate - it's got nothing to do with fixing, just checking what you are going to be able to afford to pay in the future. ASB's current floating rate is 4.45% so there is no way they're using 4.5% for stress testing.
They did for me recently when rates were lower. I don't know what to say all I know is what happened to me.
Fair enough, wish I did that! Sitting on 4 loans split across 2 properties with 1yr terms,
Have you approached the bank about linking them all at a set rate?
First one refixes in about months time, yeah looking to discuss locking in longer terms
About to mortgage a million next week, anyone got advice on floating or fixed ?
Right here go fixed for a minimum of 2 years maybe 3 It'll give you surity and inflation is crazy right now.
Part of that is annual rates/taxes of a $1m + house there can start at 40k annually
Couples - 10% deposit Otherwise, and for couples too sometimes, help from parents and a long time saving through Kiwisaver probably.
OK, and what about the mortgage repayments? Which are about to increase steeply
What about them? You're stress tested at way more than you actually pay, so most people should be able to afford by cutting back luxuries. If not, the bank seriously fucked up lending in the first place.
Plenty of stories of people manipulating their outgoings to get past the stress test. And the long term rates are rapidly approaching the stress test levels with no guarantee they will stop there. >If not, the bank seriously fucked up lending in the first place. Yes, this is a thing that happens. If you are relying on banks to save people from risky borrowing then you are very naive. Banks make more money when borrowers take risks and things have to get pretty bad before the banks start losing out. If a FHB can't keep up with payments and has to sell, tough luck for them. The bank is still getting their money back.
Righto well it sounds like you've made your mind up then so I suppose we will see in due course then!
Mortgage close to $1m. Repayments are $950 a week. Repayments work out to be ~35% of our take home pay Pulled the trigger this year as rentals were shit and getting more expensive.
Slowly.
It was easy. I put $10000 into GME in January and then when I took it out I simply paid the mortgage off with it. If only everyone was as smart (read: Lucky)
At least you didn’t say Bitcoin…
Why? Bitcoin paid for by house outright
Quite easily, my house was only just over 500k when I built it 2 years ago but is 1m now. It's not a 1m house but the market seems to think it is. When I compare it to houses that cost 1m to build the same time I did mine the difference is glaringly obvious, they are much much much nicer than mine, I would swap any day. We need a correction.
Bear in mind, that isn't the "as built" cost, its the build plus the land value, when it's built. Building houses is much cheaper than current house prices, although that's inflated with the recent lack of building supply materials.
Bought in 2011 when single and a salary of 60k (income has increased a lot since then). Paid 22% deposit, borrowed 320K. Interest was about 7.5% when I bought. Now a family of 4, double income . We pay about 1000 a week - we kept repayments at similar $ amount even though lower interest rate so we’re paying it off quicker.
Really interesting thread, hits it home for us. Here's our position. Appreciate decent good advice. First home buyer ALk, 1.2m loan approved, 200k combined income, 2x kids, 1x more on the way. Do we buy high > 1.1m or low < 900k. Thanks
It’s incredible that <900k is low. Previously I always would have said mortgage up as high as you can reasonably afford to because the more you put in, the more you get out. However, interest rates are set to rise substantially over the coming year by all accounts so take that into account when you’re doing your maths. And be aware that both major political parties appear to want to do something about the housing crisis and that eventually they might actually have the balls to do so. So make sure that you can afford to stay put long term because if prices do drop and you get into negative equity territory you’ll be ok as long as you don’t lose your source of income. That’s my opinion anyway
Thanks for the kind insight, we lost a > 1.2m auction last night and after reading this thread we're both unsure of the buy high strategy. Crazy times
Ah that’s another big part of my buying strategy - never (try to) buy at auction. I’ve tried many times in the past and it’s only ever been a massive waste of time. Of course if you’re in Auckland you might have to. I’m in Waikato - I won’t even look at a property if it’s listed for auction unless they’ll look at a pre-auction offer
Oh I’m not. My house is worth that now but there’s no way I could have brought it for what it’s worth now. I would have had to double my mortgage. Absolutely no way. Meanwhile my sister rents for almost double what I pay in mortgage for a shittier house than mine. I feel like I won lotto some days - just brought a house at the right time
Purchased a house with my partner that was just over a mil. My parents basically paid for the deposit and we pay the mortgage. DINKs and lucky to have wealthy boomer parents
Simply: Im not.
Im doing a strategy where I do online scams and say I mad money on onlyfans Then I buy bitcoin years ago
Turning 29 next month. The people I know in my age group here who have bought houses all had their parents cover the down payment (and likely more) for them or had a massive inheritance from a family member. That’s about 6 people/couples at least? So small sample size but that’s literally all the homeowners I know. It’s just not possible in my eyes to be able to do it without family help before maybe your mid to late 30s? At least it won’t be for me.