• How to use KiwiSaver to buy your first home

    how to use kiwisaver to buy a house

    Thinking about using KiwiSaver to buy a first home?

    Honestly, KiwiSaver or no, buying a house is kind of a nightmarish process. I was going through some files on my computer the other night and came across some finance documents from my mortgage application days. I couldn’t bring myself to delete them in case I wind up needing them for something again, but I definitely did not linger on them. You can bet I clicked away FAST.

    It’s been over a year, and thankfully the memories of that traumatic time have faded. But I thought I’d jot down the steps involved for anyone who might find it useful, before I forget entirely. And it seems like Auckland’s crazy runaway house price growth may finally have slowed. So if you are thinking about braving the market as a first home buyer, here’s a rough guide based on my experience of using the KiwiSaver withdrawal option for a first home.

    1. Apply for HomeStart grant preapproval (if you meet the criteria)

    The HomeStart grant is a feature of the KiwiSaver scheme that gives you a cash grant toward buying a first home. There are income limits (less than $85,000 for one, or less than $130,000 for two or more people), house cap limits ($600k for an existing house in Auckland or $650k for a new build; less in other regions of NZ), and you must have been contributing to KiwiSaver for at least three years.

    Other criteria apply too – eg you’ll need to live in the house for at least six months and have at least a 10 percent down payment (although that can include the HomeStart grant itself, and of course your own KiwiSaver first home withdrawal funds).

    With the HomeStart first home grant you can get $1,000 for each year that you’ve contributed to KiwiSaver, to a minimum of $3,000 and a maximum of $5,000. If you’re buying a new build, all of these figures double – $2,000 per year of contributions, to a minimum of $6,000 and maximum $10,000!

    You can get pre-approval for the KiwiSaver first home grant, which is valid for six months. And you can do it all online. I received pre-approval within a couple of days via email!

    Don’t leave it until settlement or you might miss out entirely – you need to apply, at a minimum, 20 working days before your settlement date. Get preapproved, seriously!

    Note: I did not actually wind up using the HomeStart grant in the end, so I can’t speak to the latter parts of the HomeStart process beyond getting pre-approved.

    If you meet the criteria for the HomeStart grant, then you will presumably also meet the criteria for the Welcome Home loan scheme…

    2. Apply for a Welcome Home Loan (if you meet the criteria)

    Welcome Home Loans are a government initiative for first home buyers who only have a 10% deposit. Not all lenders offer these loans. You can apply directly to the lenders listed on the site, or you can go through a broker (I used a mortgage broker recommended by a friend).

    Getting preapproved took bloody ages, to be honest. The Welcome Home Loan application has to go to Housing New Zealand and I believe there was a backlog at the time I applied, and I literally had to wait a month to hear back.

    Note: I did not actually wind up using a Welcome Home Loan  in the end, so I can’t speak to the latter parts of the process beyond getting pre-approved.

    3. Apply for a KiwiSaver first home withdrawal (anyone and everyone)

    You can basically skip ahead to this step if you don’t qualify for/want to use the HomeStart and Welcome Home Loan options. You would want to have sorted out your mortgage preapproval before this step, though.

    In my case, despite having jumped through all the hoops already, I wound up receiving some 11th hour financial help from family which meant I ditched the HomeStart/Welcome Home Loan path, and got a generic bank mortgage.

    As soon as you sign the sale and purchase agreement on a house, apply directly to your KiwiSaver provider for a first home withdrawal. Again, do not leave this until the end! Your provider will probably require 10-20 working days to process your request for a KiwiSaver withdrawal as a first home buyer. I think mine took almost two weeks. You can request to withdraw a certain amount, or the full balance (that said, you must leave a minimum of $1000 in your account, so you can’t totally drain it).

    If approved, your KiwiSaver provider will transfer the money to your lawyer’s bank account. It never actually passes through you.




    A note about deposits and KiwiSaver

    I didn’t realise this, but there are actually two aspects to the deposit involved in buying a house: the portion you pay the agent and the portion you pay the lawyer.

    What we generally talk about when we talk about deposits is the amount you need to put toward the purchase price, from the lending perspective (usually 20% these days, 10% under the Welcome Home Loan) – which you pay to your lawyer’s account prior to settlement day.

    But there’s also the vendor deposit – the money you pay to the real estate agent to secure the house. This may be payable upfront upon signing the sale and purchase agreement as in my case. In some cases you might be able to arrange to defer this until the day of going unconditional, but obviously from the seller’s point of view it’s in their interests that you stump up some cash upfront as proof of your commitment to the sale.

    Realistically, I don’t see how you could use KiwiSaver for the initial vendor deposit. Depending on the timeframes involved in your particular transaction … if most of your deposit is coming out of your KiwiSaver, this might pose an issue.

    You can’t use a HomeStart grant to pay the seller’s deposit, so that’s not an option. If you’re relying on using  KiwiSaver withdrawal funds for the vendor deposit, you’d have to negotiate payment upon going unconditional, and a long conditional period. You need to send in your sale and purchase agreement with your withdrawal application forms, but it takes time to process all of that (10 working days minimum with my provider, for example). If the vendor insists on a shorter conditional period (5 business days is common), make sure you have access to enough cash in a pinch! I saw a post online the other day where the buyers took out an overdraft for this exact purpose, because they got caught out by this.

    Here’s my attempt to visually interpret the cashflows involved during this process.

    Buying a house in NZ cashflow - transactions process between purchase and settlement

    For example, let’s say you have a 20% deposit, of which half comes from your KiwiSaver. First you might pay 5% to the agent, then 10% is withdrawn from your KiwiSaver and sent to your lawyer. You send the last 5% of your cash deposit to your lawyer. The remaining 80% is drawn down from your mortgage and transferred from bank to lawyer. This all adds up to 100% by settlement day and is finally sent to the vendor.




    There you go – that’s my take on buying a house with KiwiSaver as a first home buyer! As I said, I can’t speak to using the KiwiSaver Homestart first home grant/Welcome Home Loan all the way through, but I can tell you for sure what it would add more complexity and paperwork at the end. Be prepared!

  • A millennial’s perspective on the Auckland real estate market

    auckland real estate rant

    Everyone and their hamster has an opinion about first home buyers in the Auckland property market.

    Even those who have no freaking idea what they’re talking about. I don’t know why this surprises me. It really shouldn’t.

    I may own a house myself but I get SO riled up when this topic comes up. We had a spirited conversation about it at work the other day, and I couldn’t stop thinking about it afterward. Here are my definitive personal thoughts on the matter based on the most frequently asked questions.

    Why don’t you just buy an apartment/townhouse?

    Banks are tougher on lending when it comes to apartments (especially smaller ones) and then you have to account for body corporate fees.

    Apartments and townhouses may have a good reputation for being modern and sought after overseas. Here, they are more synonymous with cheap and nasty. How many apartments/townhouses built in the 2000s here were part of the leaky house epidemic? Not only have those owners had to deal with the costs of fixing their properties, they haven’t seen much (if any) capital gain.

    I lived in a neighbourhood where quite a few apartment/townhouse developments sprung up around the same time. I have lived in 3 separate properties in those developments (1 apartment, 2 townhouses). They were cramped, poorly built, with paper thin walls, and ALL OF THEM WERE LEAKY. I didn’t really care as a renter, but I would never buy one to own. In terms of the residents, let’s just say they almost exclusively fell into 2 main buckets and I didn’t love either of those crowds. They have almost become a kind of ghetto in a way, and I believe the same is true in other similar developments around Auckland.

    Some of those actual apartments/townhouses can be bought for fairly cheap right now. And I wouldn’t touch them with a barge pole.

    What about buying a new apartment or townhouse? Well, I can’t afford them, quite simply. If I did have $700k to spend, I personally would rather buy an older house on more land. As you might have guessed, I’m pretty wary of recent construction in Auckland from my personal experiences. And so many current development projects have been cancelled in the past few months – so if you’re buying off the plans your apartment/townhouse may not actually get built after all.

    But a house in my suburb just sold for [dollar figure significantly under the average price] …

    Bully for you. Do you understand what average means? Some sell for higher, and some sell for lower. But the average is the average for a reason. (As per previous point – just because something is cheap doesn’t mean you should buy it.)

    Everyone expects too much – new houses today are huge!

    Yes, new builds today are monstrous McMansions. … but us first home buyers are not really buying them (because we can’t bloody afford them). We are buying 70, 80, 90 square metre houses from the 1960s/70s/80s because those humble do ups are what’s (juuuust) in our price range.

    Count yourself lucky – I was paying 20% interest on my mortgage!

    And were house prices 8-10 times your household income back then? House prices have ballooned, but incomes have not grown at the same pace. Payments on a $100k mortgage at 20% are still a lot less than a $500k mortgage at 5%.

    Why don’t you just resign yourself to renting?

    (Oh, I love this one! Let me count the ways…)

    Have you ever felt the sheer terror of having to move house because you’ve been given notice to leave? Used up all your goodwill with the boss because you have to keep ducking out of work to go to viewings (because rentals are only ever shown during working hours, unlike open homes)? Applied to countless places only to never hear back because there’s so much fierce competition? Wondered WTF you’re going to do as your last day approaches and you have nowhere to live lined up?

    Have you ever opened your wardrobe to find mould growing on your clothes like a rash? Or found a mushroom growing through your carpet?

    (Then, my friend, you haven’t truly lived. Let’s swap lives, k?)

    Do you dream of owning a pet?

    Do you want to have kids, settle down, make a home?

    Do you want to decorate, hang things on the walls, paint? Do anything at all to put your stamp on your place?

    Do you want to breathe at night?

    There is your answer.

    (PS – Fortuitously, The Spinoff is running Rent Week right now … a series highlighting just how much renting in NZ sucks. Check it out.)




  • Reflections on a year of home ownership

    WAS BUYING A HOUSE WORTH IT

    Renting was to me…

    Paying more for less every year while paying down someone else’s mortgage

    Fighting landlords trying to blame us for things going wrong around the house, from the roof leaking to the shower floor breaking; having no hot water at all for a month due to them being useless

    Dealing with frequent and annoying inspections

    Never knowing how long you’ll be there

    Cold, damp, mould, sick

    Owning is to me…

    Some idea of what I’ll be paying for 30 years with some of that going into an asset of my own

    Less cold, less damp, less mould, less sick

    Knowing when we’ve broken stuff vs bad luck/shoddy work and the flexibility to address that however and whenever we want

    No inspections and no one to answer to

    Knowing we can be here as long as we want and as long as we keep paying

    Doing whatever the hell we want to the house

    Buying stuff once and for all knowing it won’t disappear or break between the unpredictability of flatmates or moving house

     

    I now pay for housing essentially what I used to earn when I first entered the workforce. I am so thankful to be in a position to afford a home, to have this degree of security. It is a particularly terrible time to be a low-income renter, and there are no signals of that letting up anytime soon.

    In a typical week Auckland gains 825 new residents and requires 278 new dwellings. It’s pretty obvious that construction is not keeping up with demand.

    I may never own a holiday house (which realistically I’ve never aspired to anyway) but I’m working to create a home I love – not just to come home to in the evenings, but to enjoy through the weekends and holidays too. Sitting out in the sun on my deck is quite possibly the happiest place on earth.

    I had a good feeling about it as soon as I stepped into the house. It was a do up, but liveable. Now that I’m coming up on a year, I’m feeling more critical of it than ever, but I’m also very good at identifying what really matters.

    Overhauling the bathroom or updating doors and wardrobes – not a priority. New kitchen – yes. Who ever thought tile counters were a good idea? They break and chip like mad, plus the grouting…! I’d also quite like cabinets that shut properly, a non grotty pantry, and a dishwasher. But good things take time (read: cost money). I’m probably only 20% into my savings goal for kitchen renovations.

    It hasn’t been all sunshine and unicorns. A few cheaply done things started coming apart pretty early on – but it’s all right, simply more motivation to keep saving to redo this dang kitchen! And it’s getting time to upgrade one side of the fence (the wire chain/link side) to something more sturdy, for our dogs (and the rascally kids next door). Apparently neighbours are meant to split fencing costs – here’s hoping…!

    I love home ownership and I am grateful every single day for what I have.




    Disease Called Debt
  • 3 ways building a new home can save you money

    Golden Homes

    Ever thought about building a new house? That’s how my parents built their ideal home back in the 1990s and they’re still there 20 years on.

    With an average of 47 different tradespeople working on one house from start to finish, managing a new build yourself – not to mention keeping a close eye on your build budget – can seem rather daunting! When you’re time-poor but striving for the kiwi dream, working with a building company is the way to go: full control, minimal effort and no budget blow outs.

    I talked to the team at NZ building company Golden Homes to research the ins and outs of building a new home and discovered a lot of good reasons to do it. Here are my top three:

    1. Minimal maintenance

    Repairs and replacements are a big expense for most homeowners. But with a newly built house, you can relax knowing you won’t have to worry about fixing the roof or the deck any time soon.

    You can also feel safe in the knowledge that a new home has been built user newer technology and more durable materials – such as steel framing vs. traditional timber framing. Steel frames reduce the risk of warping, shrinking or rotting, and thus of cracks in claddings or linings (also a plus in earthquake-prone areas!).

    2. New homes are more efficient

    Good news for your finances – living in a new home means you’ll most likely get to save on running costs. With everything built to the latest standards and codes, expect those benefits to filter through in energy efficiency.

    Building new is also good news for your health – we just put in R 2.9 ceiling insulation and can already tell the difference. Seriously, imagine coming home to double glazed windows and R 5.0 in the roof off the bat – no more putting up with cold or damp housing! Hand on heart, having lived in so much substandard housing and felt the physical effects, I can tell you that living in a healthy house is priceless.

    3. It’s done right the first time

    It’s rare to find your perfect house, and ripping up flooring, repainting and remodelling may be required to get what you want out of an existing house. Renovating can be a headache – not to mention expensive!

    With a building company like Golden Homes, 99% of houses are built with customisation – whether you want to start with a blank canvas or make a few tweaks to one of their existing designs, it’s easy to create your own masterpiece.

    Have you built, or thought about building? What influenced your decision?

  • Can you really afford NOT to buy a house?

    Can you afford NOT to buy a house?

    As you may expect, the following is a New Zealand and particularly Auckland-centric perspective…and yes, it is a rhetorical question.

    Look, for many of us home ownership is beyond reach. That ship has well and truly sailed. Things may change in the future, but then again, they may not.

    I’ve managed to scrape into my own place, but I worry about those who haven’t, who won’t.

    Buying a house (as in the actual transaction) boils down to nothing more than money – albeit at levels that are wayyyy beyond reach for the average person, seeing as an Auckland house makes more than anyone working an actual job. But owning a home is not just about the money.

    New Zealand: where you can’t afford to buy a house … and yet you can’t afford NOT to, either.

    What’s your health worth?

    Our housing stock is shite and our rentals are the worst. Cold and damp, they are literally making us sick. Renters in NZ have worse health outcomes than homeowners. What’s good health worth? $50 a week? $100? $250?

    My house isn’t perfect. In the worst of winter it still gets too cold and the windows mist over. Yet it is many times better than the rentals I’ve endured. I can actually breathe. And that is priceless. More importantly, now I can install insulation, a heat pump, whatever I want.

    Fixing renting needs to start here. Longer tenure is pointless if the property still sucks. But that does bring us to…

    Can you afford the instability?

    Renters have to move. (Often at the most inconvenient times.) Pay nonrefundable agent fees. Pay for the cost of moving (trucks, cleaning, double rent etc) over and over again. Sneak away from work to view houses because viewings are only ever during business hours. And you’ll have to do it many, many times because there’s so much competition for rentals.

    That’s before we even try to quantify the stress involved with this lack of tenure. If you want a family, add kids into the picture and imagine how much harder it gets.

    And after that…

    What will you do when you stop working?

    Retirees still need a place to live. Housing is a critical part of the retirement puzzle.

    Rents keep going up. In my childhood suburb, my parents’ house has tripled in value, and the price of a 3 bedroom rental then is now the price of a 1 bedroom. Who knows how much market rents will be when it’s time for us to retire, and how much they may rise between then and when we die?

    A project that I have been peripherally involved in around retirement policy is generating some discussion here in NZ. One particular submission sums the current situation up quite well, and I paraphrase it here: The political approach to housing is totally dysfunctional, favouring the old and wealthy over the young – and will cause huge problems for the currently young when they come to retire. A key theme among financially secure retirees, or those who are on track to be, is that they own their own homes. They are – or will be – free of a housing payment.

    That’s going to change. Even now, there is real concern among renters about what their lives are going to look like in retirement. Moving is expensive, tiring and emotionally draining. Landlords are only going to continue to cash in on their capital gains – I know I would – and who wants to be forced to move at age 70 or 80?

    Personally, I didn’t think I could afford to save enough for retirement to make up for not owning a house. I didn’t think the difference between (ever rising) rent and a mortgage payment would actually put me ahead (particularly if I was to try and rent somewhere decent). And there’s definitely something to the ‘forced savings’ discipline of having a mortgage.

    But again, this is a choice that is available to fewer and fewer people as time goes on.

    Us homeowners have lucked into a huge advantage. And it’s horrendously unfair. Once more with feeling: New Zealand: where you can’t afford to buy a house … and yet you can’t afford NOT to, either.

  • How homeownership saves me money

    The surprising ways home ownership saves me money

    Over the past decade I’ve wasted thousands of dollars renting (not even counting rent payments – those would be in the tens of thousands and at least I got shelter in exchange for those).

    There are costs that come with home ownership – some unavoidable, some totally up to you – but those are covered extensively elsewhere on the internet and I’m not getting into those today.

    No, what I’m talking about are the surprising ways home ownership has saved me money here and there.

    Power

    A poorly insulated house is less efficient to heat. We’ve lived in iceboxes half the size of this house that cost the same in power bills as this one. And in the case where we’ve lived with flatmates, well, other people often don’t care about saving power the way you do.

    Related: I’m probably saving a small fortune on tissues. I no longer have a constantly blocked or runny nose – it’s the exception rather than the norm now.  Rental standards in NZ are pathetic (and here’s even more skin-crawling stuff).

    Now don’t get me wrong. This is still an older house and we’ll need to add more insulation to the roof, which will be in the realm of $1500-2000 if we DIY and more if we get in the pros to install it. On the very coldest nights this winter the roof has gotten down to single digit temperatures overnight, with the rest of the house plunging to low double digits, which isn’t ideal. But it’s noticeably drier and warmer than the many rentals I’ve endured.

    I’m sure winters are getting colder (either that or I just feel it more with age) and T agrees. We experienced some record low temperatures this year and last, so I don’t think it’s entirely my imagination.

    Insurance

    My content insurance dropped to a third of its former cost once I became a homeowner. I’m deadly serious. Car insurance also decreased by a tiny bit. Just another way renters get ripped off.

    Going out

    Home is a haven now. Not a cramped, damp place to escape. Not a place with flatmates who grate on your nerves. I love my house so much, warts and all. I’ve always been a homebody and at last, after so many years, I have somewhere I can honestly nest and settle in for real. I feel an unbridled sense of joy and serenity every time I  step out onto my  sunny deck or sit down in my dining nook.

    As you can probably guess, I have had zero regrets about buying a house. Home ownership has been everything I dreamed of and more.

    brokeGIRLrich
  • Here’s the SINGLE best thing about owning a house

    The best thing about owning a house

    I can breathe easier. Not just metaphorically knowing that we have security of tenure here, but literally.  It might seem like small stuff, breathing freely, but it’s priceless.

    You might remember I first mentioned that I was having occasional trouble breathing back in 2010. So, I never actually got it checked out. I pretty much knew it was down to living in cold, damp places, and there wasn’t much to be done about that until I could buy a house of my own.

    I’m pleased to report that owning a house has made a huge difference on that front. Breathing has not come this naturally to me in years. Even on brisk walks outside in the thick of winter. Even overnight.

    Sometimes (not always, I grant you, especially through the colder months – but still much more regularly than never) I wake up in the morning and find myself breathing comfortably through my nose, rather than sucking cold air desperately through my mouth.

    It used to be that the only time I didn’t struggle to breathe overnight was in nice hotels, or overseas in warmer climates. But otherwise, I was never able to breathe solely through my nose at night; I just couldn’t get enough air that way.

    I haven’t had the flu this year – and I always get the flu each winter, which usually knocks me out for a few days.

    It’s hard if not impossible to quantify good health. How much damage has 10 years of renting already done? Renting for life might not have actually killed me, but it would’ve taken its toll.

  • Life with a mortgage (is surprisingly sweet)

    Life with a mortgage is pretty sweet

    Living with a mortgage ain’t half bad.

    My contents insurance, which WAS around $1200 a year when I was renting, plunged to about $400 when I bought my house. Car insurance decreased by a few bucks too. Unexpected fringe benefits of home ownership! My jaw literally dropped when I heard the new figure and I had to ask the rep to repeat it back to me.

    My house insurance is about $1250 a year. And since I got a $1200 cash gift from my new bank when I confirmed my mortgage, it’s basically free for the first year.

    Council rates (the equivalent of property taxes in some of your countries) are pretty darn affordable. Mine are just under $1500 a year. This is typical for houses in this range; when house hunting I saw probably up to a $500 variation in annual rates between all the properties, based on their value.

    And YES, before all you (non NZ) lovers of renting jump in, I’m prepared for the costs of maintenance – I will be referring back to my pre-purchase house inspection report plenty over the coming years, which was brimming with recommendations around everything from insulation to safety glass.

    Replacing the deck and repainting the roof will probably be the priorities – but a new kitchen just might come first. There’s no rangehood, no splashback (both noted in the report as matters to remedy) and everything just generally needs an overhaul. Might even knock through a wall and make the whole living and kitchen area open-plan with an island.

    How much am I paying?

    My 30-year mortgage is structured in three parts. Here’s what it’s costing me per fortnight:

    • $77.83 ($30,000 floating loan @ 5.29% – was 5.44% at drawdown but rates dropped since)
    • $492.24 ($215,000 fixed loan for 2 years @ 4.35%)
    • $474.30 ($200,000 fixed loan for 3 years @ 4.65%)

    So I’m paying the bank $1044.37 every fortnight, plus I’m also repaying my family at $200 on top of that: $1244.37 all up. Or, $2488.74 a month.

    Thus far I’ve also knocked another $3,000 straight off the principal with extra lump sum payments but now I need to turn my attention to a few other financial priorities.

    Mortgages in NZ

    So, if any of that sounds weird, here’s a simple intro to mortgage options in NZ.

    Or if you’re not much of a video person, let me try to run you through how things work here.

    Fixed vs floating: There are fixed mortgage rates and floating (variable) mortgage rates. Fixed rates are typically lower.

    The minimum term you can fix for here is generally 6 months and the maximum 5 years. Lots of people (like me) split up their mortgage into a few separate loans, some floating, some fixed. Floating allows you to focus on repaying the loan without penalties, while fixed gives you some certainty around rates (but with less repayment flexibility). And thus, a combo can offer the best of both.

    Then there are a few more types of mortgage accounts available with floating rates:

    Revolving credit loans are basically a giant overdraft, with one account acting as your loan, chequeing and saving account all in one. Your pay goes straight into the account and the idea is to leave the money sitting there as long as possible (eg putting your expenses on a credit card and paying them off at the end of the month). By keeping the account balance (and thus, loan balance) as low as possible at any time, you save on interest because the bank calculates interest daily.

    Obviously this requires discipline and organisation, though you may be able to set it up so that your credit limit reduces over time, making it easier to stay on top of things and ensure you’re making progress. When it comes to refinance/rollover time I imagine I’ll choose revolving credit for part of my mortgage.

    Similar but different, an offset mortgage is linked to your other accounts with the bank. Your mortgage interest is offset by the amount you have in your other accounts. For example, if your mortgage balance was $500,000 and you had $20,000 between your savings and chequing accounts, you would only be paying interest on $480,000. But compared to revolving credit, offsetting is not offered by as many banks.

    And in case you missed it: my step by step guide to actually buying a dang house, from getting preapproved to settlement day.

  • How’d she manage to pull off buying a house? (blood sacrifice and dark magic, duh)

    How I bought a house in Auckland on a single income

    It’s too easy, for those of us who have somehow managed to scrape into the hallowed ranks of Auckland homeowners, to fall into the trap of blaming everyone else for their own poor financial choices and unrealistic expectations.

    I’m determined not to do that.

    I know that simply cutting back takeaways is not going to get you into a house.

    I know that rents keep rising; when I was at university $350 a week got you a three bedroom rental in the humble suburb where I grew up, and today it gets you a one bedroom.

    I know that prices and incomes are all out of whack, and yet, the way things are here, it generally makes sense to buy if you can.

    Basic housing – dry, warm, healthy, affordable even – is a luxury in Auckland and it shouldn’t be. Renters are treated as second class citizens in every way. The quality of rental housing is abhorrent. There’s no stability. I note without pleasure (okay, maybe a LITTLE grim pleasure) that relatively well-off media commentator types who once often spoke out about what a waste of money it was to buy a house have now started families and oh, promptly gone and purchased property to live in.

    I’ve put off writing more about the nitty gritty of buying my house – the financials, that is.

    In a way, I feel like I haven’t truly earned it. And maybe more importantly, I’m nervous about the inevitable judgement that’s going to come my way.

    Do I owe anybody any details? No. But might transparency benefit someone else out there? Maybe. And if the struggling house hunters who opened up about their finances for the Herald’s Home Truths series can do it, I probably should too.

    Here it is.

    Based on my pre-approval, I set out to buy a property $500k or less, using the Welcome Home Loan scheme (allows first home buyers to get in with 10% deposit, subject to other conditions). The majority of my deposit came from my KiwiSaver. (It’s never been affording mortgage payments that poses an issue, but rather the down payment.)

    At this point I was temporarily staying with my parents, and they were helping me house hunt. There wasn’t a lot in my price range at all, let alone properties that were actually fit for residence. The two places in my budget that I wanted to make an offer on (though I was pipped to the post on those) … let’s say my dear mum wasn’t very impressed with the properties.

    But as I told them: beggars can’t be choosers, and I’m a beggar in this market. My criteria is whatever I can afford, and within that, whatever I think I can live with. I was prepared to compromise on various things as required – basically anything, although not everything. Slim pickings weren’t necessarily a negative. I’m chronically indecisive so a narrow range of options was actually a good thing for me.

    They also offered to help out, moneywise. I was very appreciative of the offer – and also very reluctant to accept it. My preference was to buy within my original budget, on my own steam, but together we started looking at some more expensive properties as well.

    The more we looked, the more it made sense. The phrase ‘cutting off your nose to spite your face’ comes to mind.

    The prospect of them topping up my buying power went against my core principle of Doing Things On My Own. And yet they genuinely wanted to. Rather you pay us than the bank! It would mean a better house – still absolutely in entry level territory, but more liveable and better located. And importantly, potentially a forever home. I’ve moved so, so much while renting and it has been exponentially more soul destroying each time. I always wanted to buy a house and then never move again if at all possible. I just can’t imagine dealing with the stress of moving PLUS throwing the logistical headache of both selling and buying into the mix. Obviously people do it all the time, but I can tell you right now that climbing the property ladder is not for me.

    The final price for my house was $595k, so with them making up the difference, means I owe them close to $100k. A little less than that now, after a few months of repayments.

    So in the end, I didn’t take a Welcome Home loan, just a regular one – but it worked out for the best. As a result, the rest of the loan process was a lot simpler and shorter (less paperwork). And I didn’t get the $5k government HomeStart grant, but that would basically have been cancelled out by the Housing NZ premium applied to the WHL anyway. Turns out that’s a bit of a wash as a single income home buyer…

    Withdrawing KiwiSaver money for my first (and hopefully last) home puts a major dent in my retirement savings, it’s true. But I’m comfortable with that choice, having pondered it for a couple of years, and still being young with time on my side. Saving for the future is important – but so is having a stable and healthy living environment in the present. (One word: mushrooms.) And while I don’t see my home as an investment, having a paid-off house will be a huge benefit come retirement. There’s a lot of talk right now about how Generation Rent will be at a disadvantage in this regard, and for good reason. Having discussed this with people at work who know much more about finance, mortgages and the economy in NZ than I do, I feel confident in this decision being the right one for me.

    Probably more painful – emotionally anyway – is the fact that I accepted family help. Now I’m just like basically every other Auckland homeowner my age. Even as a loan rather than a gift … this makes me one of those awful privileged millennials tapping into the Bank of Mum and Dad. Let me tell you, that stings.

    But pride ain’t everything, and I’ve said before that I wouldn’t look a gift horse like this in the mouth should it cross my path. I’m happy (understatement: DELIRIOUSLY HAPPY) and apparently so are they. A win-win, I suppose. Heck, for health reasons alone, I can tell you it has been so, so worth it already! I rub rosehip oil into my stress scars each night (from the chronic eczema that literally evaporated once I moved into my house) and I know I made the right choice. I pinch myself most days, wondering if this is actually my life, and feel so grateful to be here.

  • All the money I’ve wasted renting

    All the money I've wasted renting

    Ten years of renting was a few too many, personally.

    Non refundable agent’s fees

    A week’s rent plus GST – many, many times over.

    Bonds you never see in full again

    Fair enough in some cases, but definitely not in others.  And as a tenant you’re at a vast disadvantage here.

    Carpet cleaning

    Expensive carpet cleaning fees are included in leases by agencies – big and small alike – everywhere. Tenancy law information online seems to suggest these are unlawful, or ‘unenforceable’, but practically speaking, if it’s in the contract what are you going to do, kick up a fuss? There’s a dire shortage of housing in Auckland and it’s hard enough to secure a rental as it is.

    Dodgy utilities

    I was briefly in a very strange situation where I was in charge of the power bill, and everyone was supposed to split it evenly with me, but there was also a separate couple subletting the self contained downstairs rooms from one of the other flatmates/tenants (who was also the mother of my friend and fellow flatmate), and that flatmate was charging them a flat all inclusive rent and not including them in the power bill split. Yeah, try wrapping your head around that. Then there was the shitty apartment where you had to use their electricity provider – there was no other choice – and that provider had only one plan and no low user option, meaning we were stuck with higher prices than we would be paying on the free market.

    Buying and selling things

    Every move forces change of some sort – buying or selling appliances and/or furniture depending on each individual property’s size and what is or isn’t provided with it. Fridges, washing machines, tables, couches … It gets old.

    Lost and broken stuff

    I’ve had countless possessions go missing or break due to flatmates. No point having nice stuff.

    And I can’t put a dollar amount on it, but…

    So much time and stress. Taking time off during the work day to dart out to viewings (always within business hours) and to agency offices to sign papers.

    Literally months of uncertainty over the years when you know you have to move and scramble to find a new place (about six months total in 2015 alone).

    Fighting shitty landlords trying to blame us for things going wrong with the house, so they wouldn’t have to foot the bill for their own maintenance and repairs.

    So, so glad not to be living what amounts to a temporary life anymore.