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  1. #1

    Default Unusual situation for considering buying vs renting

    As the title states, ive got a dilemma on my hands.
    Ive recently decided to leave the army, to Study IT after 8 years of service,
    for my troubles i will be getting 50 odd K from my Super Payout, maybe 40k after i pay moving costs and pay off my the small debts.

    Unfortunately I made the decision to study in ChCh, just before the second episode of "Shakey Town"
    Fortunately, the mother in Law won Lotto, and has 200k in a Term Deposit, So I think that may be good "collateral" to garuntee us with the banks.

    Currently searching for a good house, and you know how things are in ChCh at the moment. a 3 bedroom place goes for 350 a week, 700 a fortnight..... We will have to get a flatmate obviously on a student wage and a wife on acc with 2 slipped discs awaiting surgery.


    Working on a 250k house, with a 45k deposit, (not quite 80% but the garuntee oughtta cover it) the ANZ loan calculators suggest on a 30year term, (minimum Payments for student types for first 2 yrs) we would only be paying 560ish a fortnight in a mortgage, 140bux less per fortnight than renting. What are the hidden costs for a mortgage? I have no idea what the going rates and insurance would be in ChCh.
    I would rather put my money towards a mortgatge than piss it against a 1400 per month rental!

    Any Advice someone can give on the matter? Ive not gone to a bank yet, and id rather get advice/ideas here before being scoffed at by the banks.

    My Alternative is to spend a bit of the money, saving 30k, of which id split 20k into shares and 10k into the bank, for all those "just incase" scenarios students live for. Being a technology freak I would consider 20k into various tech companies, from ARM Holdings (designer of chips for all high end smartphones and tablets) through to Windflow technologies. (an Nz company)

  2. #2
    Join Date
    Oct 2008
    Location
    Auckland/Melbourne/ whereever the money is
    Posts
    1,380

    Default

    Dont forget the Council Rates (guess $2k pa), water rates (?) , insurance ($500pa building $500 pa contents) & an allowance for maintenance ($2-5k).

    Also keep some cash as a buffer

    Other than that & as long as you are VERY careful what area you buy & the type of property, & of course get building inspections etc, sounds like it is worth looking very seriously at buying, especially if you plan on staying on CHCH.
    If you plan on moving once you have finished training, then be sure the place you buy would be practical for converting to a rental
    Last edited by Keithw; 16-03-2011 at 08:59 PM.

  3. #3

    Default

    Perhaps your first port of call should be to an insurance broker to find out the new policy facts.
    If you can't get that for a number of months then renting initially may be the only alternative.

    Insurers halt new policies after Christchurch earthquake
    http://www.stuff.co.nz/business/mone...rch-earthquake

  4. #4
    Join Date
    Apr 2010
    Location
    Waikanae
    Posts
    463

    Default

    Due to the "fluid" situation in Chch, if I were you I would keep my options as open as possible, and not enter in to contracts I couldn't get out of easily.
    For what it's worth, I find as a general rule that the shares I invest in usually nosedive for about 10 years then go under. They all seem good choices before my name goes on their share registry. If you are in the situation of having a decent lump sum, perhaps for the first time, every man & his dog will be happy to "advise" you, but not help meet any subsequent losses, which will actually be all yours or your mother-in-law's.
    Consider renting and putting the rest in some term deposits with your bank for a year or so, see how your studies work out, and get a better idea of the housing values as you wait. You can always go into buy mode later, no hurry right now I wouldn't think. Good luck, I hope your wife gets well soon.
    Last edited by kapitibeanman; 16-03-2011 at 11:08 PM.

  5. #5
    Join Date
    Sep 2007
    Location
    Christchurch
    Posts
    1,259

    Default

    One cost is the interest you don't get from investing that $45K (say, 5% after tax which is $2250). Another is the lawyers fees, inspection reports etc for buying - prob about $2K, but at least that's a one-off cost.

    Rates are about $1500 - but will go up!

    No water rates, but yeah, about $500 for house insurance and $2-5K for maintenance.

    Also, have a look at http://www.interest.co.nz/calculator...age-calculator and play with what interest rate and borrowing changes do to your repayments.

    That said, it probably is a good move, if you can get insurance.

  6. #6
    Join Date
    Nov 2006
    Location
    Cyberspace
    Posts
    5,804

    Default

    Just the two of you? Get a one bedder rental for the time being.

  7. #7
    Join Date
    Nov 2008
    Location
    Karratha WA
    Posts
    1,444

    Default

    I'd definately look at buying but not this week!

    Put the money in a term deposit with Rabo bank to keep your options open and then learn all you can about where you want to buy and the post-quake issues you need to be on the look out for - insurance availability, which type of house stood up best, how to recognise damage etc. Also, give the quakes a while to settle down so new problems don't cause you problems.

    In the meantime live cheaply in the smallest cheapest place you can find with water & sewerage.

  8. #8
    Join Date
    Oct 2008
    Location
    Auckland/Melbourne/ whereever the money is
    Posts
    1,380

    Default

    All good comments above, especially Kapiti's comment on shares, unless you really know what you are doing, I would stay well clear.

    You could also talk to the bank about being on interest only while you are a student, would keep your payments down until you begin earning again.

  9. #9
    Join Date
    Jan 2007
    Location
    Christchurch
    Posts
    239

    Default Unusual situation

    I agree with keys. Do not considering buying in this environment in Christchurch unless you really know what you are doing. Wait for 12 months.
    Charlotte30

  10. #10
    Join Date
    Nov 2009
    Location
    North Shore Auckland
    Posts
    565

    Default

    If you buy, be very sure you can get decent insurance......read the policy carefully.

    I'm sure a lot of new policies will have as many exclusion clauses as possible....no doubt around damage due to "land movement".

    And I should think any subsequent damage to a property, even in say 6 years time, will be put down to a result of a past quake...ie. an excluded event, hence no cover.


 

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