Kiwisaver/Mortgage and Insurance

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nzkiwiman

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#213805 13-Apr-2017 10:35

Just wanted to get some advice from anyone who has used Kiwisaver as part of the purchase cost of a first home

I've been living at home for a while and have been told by my father that he is selling the house; as a result I have to either find a place to rent, or purchase a place of my own
I am leaning towards getting my own place as I will have to take the family dogs with me and renting with pets is hard

I have been in a Kiwisaver scheme for just over 5 years and have somewhere around $15k in there
I also have a small amount of savings that I can use as a deposit

Using a few mortgage calculators, they had advised that based on my income I can get a $260k mortgage (5.8% over 30 years). If I take the repayment amount from that $260k, and plug it into my own budget, I go well over my after tax monthly income (I get paid monthly), so am thinking that I may top out at around a $225k mortgage in order to afford the repayment along with everything else.

The one big missing piece from my calculations is insurance (house and contents) - I have no idea how much it would cost to insure house or contents (I have full car insurance @ $500 year) so does anyone have any numbers they could give me to add to my budget to see if my possible maximum mortgage value is even less than $225k.

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#1763647 13-Apr-2017 10:43

Off the top of my head, car,house contents, and life insurance cost me about $130-140 a f/n.
Includes no claims bonuses and a sub 10k car though.

lxsw20

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#1763677 13-Apr-2017 11:17

Think my house insurance is around 1k PA with AMI. Don't forget rates too.

alasta

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#1763680 13-Apr-2017 11:19

Make sure that your budget has enough wiggle room to allow for interest rates increasing by at least two percentage points over the next three years. A lot of landlords are over-leveraged, and when I checked how much my bank would be willing to lend me it was well in excess of what I could realistically afford to repay with interest rates on the rise.

throbb

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#1763683 13-Apr-2017 11:26

nzkiwiman:

Just wanted to get some advice from anyone who has used Kiwisaver as part of the purchase cost of a first home

I've been living at home for a while and have been told by my father that he is selling the house; as a result I have to either find a place to rent, or purchase a place of my own
I am leaning towards getting my own place as I will have to take the family dogs with me and renting with pets is hard

I have been in a Kiwisaver scheme for just over 5 years and have somewhere around $15k in there
I also have a small amount of savings that I can use as a deposit

Using a few mortgage calculators, they had advised that based on my income I can get a $260k mortgage (5.8% over 30 years). If I take the repayment amount from that $260k, and plug it into my own budget, I go well over my after tax monthly income (I get paid monthly), so am thinking that I may top out at around a $225k mortgage in order to afford the repayment along with everything else.

The one big missing piece from my calculations is insurance (house and contents) - I have no idea how much it would cost to insure house or contents (I have full car insurance @ $500 year) so does anyone have any numbers they could give me to add to my budget to see if my possible maximum mortgage value is even less than $225k.

Don't forget you could be eligible for the Homestart grant of up to 5k to help with your deposit too.

~1k per year for Home insurance.

nzkiwiman

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#1763777 13-Apr-2017 12:58

Thanks for the numbers

I am trying to build in some wriggle room into my numbers, which is why I think the max I can borrow is going to be less than the calculators

lxsw20

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#1763779 13-Apr-2017 13:00

Go talk to a mortgage broker or mortgage specialist at the banks. They were pretty helpful IME.

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mattwnz

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#1763788 13-Apr-2017 13:20

It is incredibly hard for someone single to buy a home in many parts of NZ, unless you are buying something small like a flat. The system is setup really for couples that work, as that is the income level who you are competing against when buying a house. As noted above, 5.7% over 30 years for interest payments sounds very low on average. I would expect closer to 8 or more, but no one really knows, and that maybe too low. Have you thought about going halves with someone, or even buying into a family property. With some cultures they pool their income allowing them to buy a large house to house multiple generations. Doesn't suit some people, but is an option when there is a lack of homes. However it sounds like that may not be an option for you.

If your income is low, you may also qualify for rates relief.

nzkiwiman

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#1763789 13-Apr-2017 13:21

lxsw20:

Go talk to a mortgage broker or mortgage specialist at the banks. They were pretty helpful IME.

Waiting on my Kiwisaver provider (which happens to be my employer) to provide the breakdown of what I can withdraw as I need that for a meeting with a mortgage broker

dfnt

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#1763832 13-Apr-2017 14:16

You should be able to withdraw your total amount less $1,000

http://www.kiwisaver.govt.nz/already/get-money/early/first-home/

Quic referral link https://account.quic.nz/refer/276294 free setup code R276294EBWOBK

alasta

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#1763839 13-Apr-2017 14:25

mattwnz:

It is incredibly hard for someone single to buy a home in many parts of NZ, unless you are buying something small like a flat. The system is setup really for couples that work, as that is the income level who you are competing against when buying a house.

This is why I get annoyed with Andrew Little rambling on about "young couples" not being able to afford housing. Surely it's easier for a couple than a single person?

With fewer people getting married and having children we really need more high density housing but my bank has just told me that they no longer lend on apartments smaller than 65sqm which certainly won't help getting these things built.

nzkiwiman

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#1763845 13-Apr-2017 14:34

Yeah the entire system being "rigged" for couples is another reason I have never tried to enter the property market.

If I wasn't being forced, I wouldn't .. thankfully looking around available listings, there are still some cheaper things available that might be in the budget. Once I get the paperwork from Kiwisaver and see a mortgage person, I'll know more.

When you do withdraw money for a house, are you still expected to contribute to kiwisaver?

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#1764118 14-Apr-2017 01:01

It's a real shame you can't fix mortgage rates for 30 years here like you can in the US. It would help a lot.

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#1764120 14-Apr-2017 01:13

i thought in the US you could just "walk away" from a mortgage, which you can't here.

And yes I'm sure you can fix for 30 years.

k1w1k1d

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#1764142 14-Apr-2017 08:05

I bought my first home when single in 1984, with a $40k mortgage. From memory interest rates were about 7% at the time, but they went up to 21% a couple of years later. That really hurt! I was paying $50 per quarter off the loan and the rest was interest.

AMI House $560K = $1,170pa

AMI Contents $100k = $600pa

Just shifted from VERO to AMI insurance as they were $600pa cheaper, so pays to shop around.

Good luck

nickb800

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#1764174 14-Apr-2017 09:14

You cannot get a mortgage rate fixed for 30 years in NZ. TSB released 10 year fixed product in 2015, and that was a first for the private banks (the government used to offer 30yr terms via the State Advances Corporation).

Yes you can stop contributing to Kiwisaver, it's called a contributions holiday, and you can effectively do it indefinitely. So that frees up 3% of your income to go on mortgage repayments

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