For many New Zealanders, the question comes up sooner or later: should I buy a home or keep renting?
The answer isn’t always straightforward. Property prices, interest rates and lifestyle choices can all influence the decision.
So, here are five reasons owning a home may be worth considering – along with a few things to keep in mind.
A path towards long-term security
Housing is usually one of life’s biggest – and often unavoidable – ongoing expenses.
When you rent, those payments cover the cost of living in the property. When you repay a mortgage, part of each payment goes toward paying off the loan, gradually bringing you closer to owning the home outright.
What does it mean for “future you”? Reaching retirement mortgage-free may significantly reduce your living costs later in life. (Of course, you’ll still need to budget for expenses like property insurance, council rates and ongoing maintenance.)
Just as importantly, it can give you more financial flexibility. Some retired homeowners downsize or move to a more affordable area later in life, freeing up equity that can help support their lifestyle.
Greater stability in where you live
Renting has its benefits – the flexibility to move houses more easily being one.
However, rental arrangements can change and are largely out of your control. Rent may increase, and your landlord might decide to sell the property or move back in.
Owning your home can provide greater stability, and that’s invaluable if you want to put down roots.
Building equity over time
When you repay a mortgage, each payment reduces the amount you owe on the property. Over time, this gradually increases your ownership share in the home.
That ownership share is known as equity – the difference between the property’s value and the remaining mortgage balance. Property values may also increase over time, which can boost equity further. However, markets can move in both directions, so future values are never guaranteed.
So, why does this matter? Because equity becomes part of your overall financial position, helping boost your wealth.
Flexibility for future opportunities
A home can serve different purposes throughout life.
For some people, it remains a long-term place to live. For others, it may eventually become a rental property, be sold to fund another move or form part of a wider financial plan.
Exactly how property fits into your financial strategy will depend on your goals, lifestyle and long-term plans. But owning a home could open up options that may not otherwise exist.
A place you can truly make your own
Last but not least, owning your home also means having more freedom over how you live in it.
You can renovate, redecorate or make improvements that suit your lifestyle. That might mean updating the kitchen, building a deck or planting the garden you’ve always wanted.
That’s how a property becomes a home – a place where memories are made and life unfolds.
Important considerations before buying
Of course, homeownership isn’t without trade-offs. It’s important to look at the full picture before making a decision.
Here are a few factors worth considering:
Mortgage repayments are only part of the picture. Homeowners also need to budget for insurance, Council rates and maintenance. Repairs, renovations and general upkeep can add up over time. Learn more about all the different costs here.
Property is an illiquid asset. Unlike shares or other investments, the money tied up in your home isn’t easily accessible without selling the property or borrowing against it. An Invest Link adviser can tell you more about the investment side of things.
Selling a property can take time and involves costs. This may make it harder to relocate quickly for work opportunities or lifestyle changes, especially if the property market is slow.
Property markets move in cycles. Buying when prices are high could mean experiencing negative equity for a while, if the market declines.
When advice can help
Property decisions involve many moving parts, and that’s why professional guidance can make a big difference.
If you’re thinking of buying a house, a Mortgage Link adviser can help you look at your borrowing capacity, explore mortgage structures and discuss repayment strategies.
And if you’re considering buying property as an investment rather than as a place to live, it may also be worth speaking with an Invest Link adviser. They can help you understand how property may fit within a diversified investment portfolio.
Get in touch – we’re here to help.
Disclaimer: The information provided in this article is intended for general informational purposes only and does not constitute financial advice. Every individual’s financial situation is unique, and financial decisions should be made based on your specific circumstances and goals. We recommend consulting with a qualified financial adviser before making any investment, insurance, or mortgage-related decisions.
Please visit https://mortgagelink.co.nz/available-disclosure/ for more information and Disclosure information.
