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Thread ID: 92632	2008-08-17 05:02:00	Affordable housing	Nomad (952)	PC World Chat

Post ID	Timestamp	Content	User
697930	2008-08-17 05:02:00	Hi, I was just chatting with some people and they suggested Housing NZ. I've never had any dealing with because I thought they were for refugees or benefiaries only. I had a look at their website and they do rent for people on low income or no income. They also give house loans to people on average salaries. What's the difference here, given they charge interest and they may be willing to do deposit free loan/mortgages, numerically are they cheaper than banks or pretty much the same? They say that, but is it a myth - that they say, those who have rented and after a while have the option to purchase a property off them and probably pay interests and legal fees etc .. like a normal house but they say that what rent you paid can be discounted on the purchase price :confused: From the website what I found was that the income threshold may be around $80k or more than that depending on the amount of children (if any) so really Housing NZ could provide housing for people on these income ranges... Apart from that, I developed a spreadsheet and what I found was. If you compare, if you get a avg house in NZ and pay interest via a bank versus say rent for 40yrs to retirement which you pay less, then put the savings (mortgage minus rent) into a savings account even at 3% which I define as long term - that NZ's current 8% savings accounts would drop to 3% on the average for the next 40 yrs. I found that renting was cheaper, by the time you have paid 40yrs rent you would have this fund built up that one can access at retirement that was more than enof to pay for rent. While for mortgages, yeah by retirement you pay pay it off, but you would of paid a heck a lot to the bank, that's about 200% to the bank, compared to 100% for the original house price and at retirement you have little to show for, you cannot chop a bit out and take it to the supermarket. Capital gain is good but it might not be as good as the 40yr savings compounded. If you sold the family house and got somethign smaller at retirement when the kids move out etc., the other houses has appreciated as well, so the difference is going to be minimal or negative when compared to how many you have paid the bank to finance that mortgage. With my parents and stuff, I found that about 6yrs ago it was cheaper to mortgage but not now. I found the interest isn't the worst thing, its the price of the actual house and the many yrs for the compounded interests to build up that the bank needs you to cough up. I discounted interest to say 3% and it was still cheaper to rent. Esp if the mortgage is 30-40yrs at today's typical house prices. I found 3x things to equal the houses of 6 yrs ago. A couple, for one person to get a 50% pay rise, or for house prices to drop 33%. The practical solution I found was that to mortgage was, if the couple is on high income, to knock out the mortgage in 15yrs, while you do pay a bit more for mortgage vs long term renting, at least its yours and you have greater freedom to do what you want with it ... 15yrs was about where my comfort spot was at the most I would pay for. I found >15yrs that was just too much. But I guess for renting its not bad given you can always change places, take advantage of portable PO Box numbers, portable telephone numbers etc...... Any have any idea with Housing NZ matters would be great :) Regards.	Nomad (952)
697931	2008-08-17 07:44:00	All I know is there is a hell of a waiting list for a housing NZ rental. And its always more economical to buy than rent. Your rent will always go up, your mortgage doesn't, so after 10 years or so its bugger all per week which is why most people can pay it off quicker than the original term.	pctek (84)
697932	2008-08-17 08:01:00	I didn't account for rental rises. For buying, I calculated that a modest house in the main centres might be $400k, that would require $4k per month for 40yrs. At the end of it, one would have paid $1.2M ~. The other scenario I found was, instead of $4k per month, put $2k into rent that is about the market rate isn't it. $500 a week. Put $2k into savings each month of the 40yrs and let it compound. I'm still thinking that renting is an attractive option. I pretty much found out that a modest $400k house if one does not commit ~ $4k per month, you just won't pay it off by the time retirement.	Nomad (952)
697933	2008-08-17 08:06:00	Another thing to factor in is maintenance costs.	stormdragon (6013)
697934	2008-08-17 19:48:00	Well done Nomad, very interesting. One thing I would like to know is "Who the hell thought up that mortgage formula that the banks use ?" Ie after say 5 years you have paid mostly interest only and peanuts off the principal. So that if you sell the house to move to another town or a better house you have not gained anything ! (unless the house has gone up in value) Is that forumla set in stone by maths or is it just one that the banks use for their own nefarious purposes ?	Digby (677)
697935	2008-08-17 20:31:00	All I know is there is a hell of a waiting list for a housing NZ rental. And its always more economical to buy than rent. Your rent will always go up, your mortgage doesn't, so after 10 years or so its bugger all per week which is why most people can pay it off quicker than the original term. Just came off a 2 year term, onto another, so I can confirm that mortgages can go up.	the_bogan (9949)
697936	2008-08-17 21:41:00	Our first house cost $23500. At the time that was huge and we paid it for 12 years. Interest rates varied in that time from 12% to 6%. After 12 years we paid it off completely.	pctek (84)
697937	2008-08-18 00:51:00	Doesn't you yearly income tax give youse guys a break for the interest paid on the mortgage? We get to have the interest refunded divided by the tax bracket in which we pay . If I pay 33% of my income in taxes, I get a 33% refund for the interest side of the home loan . That is a huge incentive . . . I wonder if you get it too? For a while I was paying 28% in mortgage interest on the loan . . and I needed it to offset my net earnings for the tax year . I'd get a healthy amount back at the Federal and State tax refunds, plus I also get a renter's tax rebate for the space on which my home sits . . as I pay rent for that, but own the home . Silly, I know . . . but it was a good thing when I was still working . . Now . . and since I cannot change the interest rates and the banks are not in the re-fi business any more . . . I am not too happy with the high interest as I have no taxes to offset it since I am retired . I may have to walk-away from the place if the taxes on the property get much higher and the rent on the space goes up much more . Good thing I have something going for me in Arizona and can leave California, dusting my sandals to the whole experience of living here since 1961 . Gads! It's been that long!!! :eek: :annoyed: :waughh: :(	SurferJoe46 (51)
697938	2008-08-18 03:05:00	I should point out that the plural of you is you,not youse. It may help if you sally further than the end of your street.	Cicero (40)
697939	2008-08-18 04:04:00	Doesn't you yearly income tax give youse guys a break for the interest paid on the mortgage? We get to have the interest refunded divided by the tax bracket in which we pay . If I pay 33% of my income in taxes, I get a 33% refund for the interest side of the home loan . That is a huge incentive . . . I wonder if you get it too? For a while I was paying 28% in mortgage interest on the loan . . and I needed it to offset my net earnings for the tax year . I'd get a healthy amount back at the Federal and State tax refunds, plus I also get a renter's tax rebate for the space on which my home sits . . as I pay rent for that, but own the home . Silly, I know . . . but it was a good thing when I was still working . . Now . . and since I cannot change the interest rates and the banks are not in the re-fi business any more . . . I am not too happy with the high interest as I have no taxes to offset it since I am retired . I may have to walk-away from the place if the taxes on the property get much higher and the rent on the space goes up much more . Good thing I have something going for me in Arizona and can leave California, dusting my sandals to the whole experience of living here since 1961 . Gads! It's been that long!!! :eek: :annoyed: :waughh: :( The only way that Kiwis get a tax write-off for mortgage interest is if they are self-employed and their home is also their office . Even then the amount you can claim is relevant to the size (reasonable) of the office in relation to the overall size of the house . I get about a 15% rebate . . . Consecutive NZ governments, from both sides of the political spectrum, have closed all the lovely loopholes so that now, a tax refund is as easy to get as a Lotto win . NZ governments just love to hang onto the money they steal!	johcar (6283)
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