Own or rent??

[Big Dave]

Not that mate, but at my current salary and the way the market is going. I will never have enough to put a deposit on a house that is worthwhile and will apprieciate. If I was to get into it, it should be now, not in 5 or 10 years.

Its a bugger.

You could....
Clear any debts and weekly commits - you can get an 'undisclosed' personal loan for the deposit. (Usually at high interest - but it stops you paying rent which is 100% interest.)

Buy a shitter and do it up. then sell it - and then buy a better shitter. - it might take 3 or more goes to get to a good one.

I made most of my current equity from building new places in burbs where my mates said 'how can you live there'?

They are still renting in flats in Hurstville and I have a nice pad on a hill.

[Sniper]

You could....
Clear any debts and weekly commits - you can get an 'undisclosed' personal loan for the deposit. (Usually at high interest - but it stops you paying rent which is 100% interest.)

Buy a shitter and do it up. then sell it - and then buy a better shitter. - it might take 3 or more goes to get to a good one.

I made most of my current equity from building new places in burbs where my mates said 'how can you live there'?

They are still renting in flats in Hurstville and I have a nice pad on a hill.

I have played with that idea but never taken it into consideration because I have never met anyone who has. Might have a think about it and pick your brain sometime if thats OK?

[Big Dave]

Anyone thinking of buying should wait at least 1 1/2 to 2 years for the property cycle to hit the trough. Cycles are generally 7 years peak to peak.
There will also be the opportunity to steal something from a burnt investor, it often takes 3 -4 years for the pain to get too great for them.

Entirely disagree - 2 years worth of rent in AKL can be $30-50 grand - that would be much better in yer own equity regardless of the cycle.
Apart from that living with a landlord just blows arse. Property inspections, having to ask before scratching your nuts, the whole real estate agent deal.

[Big Dave]

I have played with that idea but never taken it into consideration because I have never met anyone who has. Might have a think about it and pick your brain sometime if thats OK?

gettin married dude - gots to plan for the little sniperettes and the pop gun action.

when I played this game you needed:

5% of the value of the house as deposit and a 30-35% of your gross weekly income available.
They figure 65% for tax food and living. so you have 35% of gross combined incomes to put toward a mortgage.
from this 35% you have to deduct hire purchase, visa, car, motocycle etc payments and what is left determines how much you can borrow.

If you have a car or bike on the drip - generally yer screwed - you have to be clear of debts. Often it meant selling the car.

Now work out how much rent you have paid over the time you've been in your place and do a rough calc on what house prices have risen by in that time - average it out over a 7 year median to keep lou happy.

fuckin hard road, but the but it's worth the ride at the end.

[ManDownUnder]

Righto you lot...

Here's the tool I use. It's not the simplest first time up... but do it once or twice and yo'll get the idea.

The point it proves is that you not only can... but SHOULD pay your mortgage off more quickly then the banks want you to. Save the attachment, change the suffix to xls, open it in Excel and follow the instructions.

Basically you punch in your mortgage numbers, and then get it to measure the effect of you paying an extra $10/week, or $20/week... whatever. And it'll show you what the effect is. Saving 5 years off your mortgage (dwon from 30 to 25 years) is a very easy thing to do, and the interest burden you avoid is HUGE.

Keep playing with the numbers and you might find you can cut your term in half... it doesn't mean paying 2 x as much though...! As an example
$300,000 mortgage (starter house in Auckland as Dover is referencing I believe...!)

$300,000 at 8% over 25 years = $532.44/week
Total Interest Paid = $394,077.32... (can you spell OUCH!)

Throw in an extra $20/week... let's call it "Latte and Lunch Money" - or maybe what... 5 beers?

$300,000 is now paid off in 22 years, 5 months at $552.44/week
Total Interest Paid = $345,295.54

Interest saved = $48,781.78.

Remind me why you don't want to pay it off more quickly??


Edit - if there is anyone out there able to help me pretty this up with a better UI... PM me. It's not the most intuitive I'm afraid... but then I'm a numbers guy.
Edit Edit... do me a favour and just keep this to yourselves at the mo - I want to make it more generally available but need to tidy it up first. My goal is to shit on the banks... return the favour they've been doing us for years...

[The Stranger:Me]

I'm on a good salary, have 15% deposit saved and I am not going to buy in the near future. I've calculated that I will be better off paying rent and saving a larger deposit. I can't afford to buy where I want to live and still have a life.

Sure I'm paying the mortgage for some one else, but hello - most of your mortgage payments (especially in the first 5-10years) are interest which goes to lining the banks pockets, not yours.

I also have trouble believing that property prices are going to rise too much more in the next 3-5 years. What with the economic climate and the interest rates, I'm going to wait a couple of years and see if there are any good bargains. It was a good property boom cycle, but I beleive I missed it. Economic cycles are a reality.

BTW - Have you seen how many rental properties are available? Every man and his dog jumped on the rental property bandwagon. People are going to start having trouble attracting tenants and paying the mortgage on these properties.....

What you say makes a lot of sense, and particularly if you are actually saving, not just pissing it against the wall.

I believe as you say, that I don't see a lot of upside in the next 3-5 yrs. But I don't see a lot of down either.

The only gain in buying now is that you don't "miss the market" a lot of people wait until the time is "right" and never do it cause the time is never right or they never see it is right until they have the benefit of hindsight.

Re the number of rental properties, yeah, it would appear a lot are available right now. That said, property ownership rates have fallen hugely over the past couple of decades to the point now where one third of the population rent. So you need to put this in context. 20 yrs ago (if my memory serves me correctly) this was about 10% .

[Squeak the Rat]

It all comes down to whether you believe there will be capital gains in the next few years, and if so how much. And how much you can save if you rent.


a) 10% capital gain on a $400k mortgage at 8% interest?

b) Put your deposit savings in an on-call 7% savings account?

c) 4% capital gain on a $400k mortgage at 8% interest?


A is probably the most attractive. But I bet we wont see this sort of capital gains in the next few years.

So why should I pay the bank $700 per week of which most is interest, versus paying $300 in rent, saving $400 and earning 7%?

[Edit:] faaark a lot of people posted while i was typing!

[Dooly]

We have our dream property, 5 mins from town, 10 acre lifestyle block. Its private and has nearly tripled in value from when we brought it.
I dont give a shit about that, we love it, privacy, can ride the dirt bikes around without trailering them somewhere, have lots of shed space, good pool, and if need be, can zip into town within 10 mins for anything.
Cant beat country living.

[Motu]

My elder daughter and fella came down to Huntly at the same time as us - they bought 2 adjoining sections for $15,000 each,paid them off in a year,then built a house on one of them.Now they have a mortgage worth a pitance for a young couple starting out,the property was worth 50% more than build value the day it was finished.The other section is now valued at $50,000,pretty soon they'll be able to build on that one.They wouldn't of had a shit show of owning their own home in Auckland.

The 4 laning between Mercer and Longswamp is finished - a Foodtown is now being built in Huntly,I don't think this place is going back to the dark days of the '80's.

[Crazy Steve]

$300,000 at 8% over 25 years = $532.44/week
Total Interest Paid = $394,077.32... (can you spell OUCH!)

Throw in an extra $20/week... let's call it "Latte and Lunch Money" - or maybe what... 5 beers?

$300,000 is now paid off in 22 years, 5 months at $552.44/week
Total Interest Paid = $345,295.54 (still OUCH!!!)

Interest saved = $48,781.78.

Remind me why you don't want to pay it off more quickly??

My 1st Morgage was over 10years and it was $147pw.....

Now im waiting on a large deposit for some thing to happen...

It might invole men from Space yet....

Never go bck to Aucks....

Crazy Steve.

[Big Dave]

It all comes down to whether you believe there will be capital gains in the next few years, and if so how much. And how much you can save if you rent.


a) 10% capital gain on a $400k mortgage at 8% interest?

b) Put your deposit savings in an on-call 7% savings account?

c) 4% capital gain on a $400k mortgage at 8% interest?


A is probably the most attractive. But I bet we wont see this sort of capital gains in the next few years.

So why should I pay the bank $700 per week of which most is interest, versus paying $300 in rent, saving $400 and earning 7%?

[Edit:] faaark a lot of people posted while i was typing!

because even if it does break even for a while - you still have a landlord and someone else controlling your destiny.
not having one of those is an intangible that I would go into the red on the short term to avoid.

[ManDownUnder]

It all comes down to whether you believe there will be capital gains in the next few years, and if so how much. And how much you can save if you rent.

So long as the gain exceeds the pain for the life of the investment.

Plan to keep it, and look at it over 10 years or so. It looks better then.

[ManDownUnder]

because even if it does break even for a while - you still have a landlord and someone else controlling your destiny.
not having one of those is an intangible that I would go into the red on the short term to avoid.

Agreed 200%

[Sniper]

Thanks Big Dave

[McJim]

I moved to New Zealand with my Kiwi wife for the 'Quality of life'.

I still haven't found it - I get 5 days less annual leave and I have to work 5 hours a week extra - houses are the same price as UK but salaries are much lower.

Daily consider returning to the UK to find a better quality of life - NZ costs far too much. Wife doesn't want to go coz this is her home.