Here's how embracing share housing could help you achieve your property goals
23 September 2016
Rising house prices across New Zealand has caused an increase of tenants in the rental market, resulted in young adults living at home longer and first time buyers struggling to enter the market.
The nature of share housing has changed dramatically. Living in a share house doesn’t necessarily go hand-in-hand with partying, sleepless nights and dirty dishes anymore.
Nowadays, working professionals in their late 20s and 30s make up a large portion of the share housing market.
Renters are now choosing to live in share houses to save money on bills, rental overheads and mortgage repayments or to put any savings towards a home deposit.
But it isn’t just millennials choosing this change. Baby boomers are also becoming increasingly interested in share housing, in a bid to earn extra cash.
So, if you’re looking to get the most out of the property market and achieve your financial goals faster, here are some tips to help you get there – whatever stage in life you’re at.
Move to a share house
University students no longer dominant the share housing market – as the costs associated with living out of home are too high.
For this reason, many older residents are now choosing to live in share accommodation to save on bills and for companionship according to Stuff.co.nz.
For example, the Selwyn House in Auckland is a $1.1m, 11 bedroom share house which provides older residents with shared living, laundry and dining rooms.
This particular share house exists to provide affordable housing for older people.
Cost is the major factor for most people considering share housing. For example, the average apartment rental price in New Zealand is $460 p/w. If you were to rent a room at $200 p/w, you could save yourself a total of $866 a month.
Share housing also gives you the option of living close to the city centre, in a suburb that you otherwise may not be able to afford.
Rent out your spare room
Renting out a spare room is an excellent way to increase your cash-flow so you can pay down your mortgage quicker or work towards achieving your financial goals.
If you have a mortgage of $400,000 at an interest rate of 5.1% over the course of 20 years, and you made an extra repayment of $150 per week (rent from a boarder), you could potentially save around $76,000 in interest and have your loan paid off 7 years sooner.
Even if you chose not to have a lodger for the whole loan period, even a few years could make a significant difference to the size of your mortgage.
If you’ve nearly paid off your mortgage, taking in a boarder could be a great way to increase the amount of income you receive – so you can take that next holiday sooner.
If you’re hung up on inner-city living, and can’t say goodbye to the hustle and bustle just yet, ‘rentvesting’ might be of interest to you.
‘Rentvesting’ means property owners can live wherever they want, in a rented property, and buy where it’s more affordable.
If you want to keep costs down, and have decided to purchase an investment property, living in share accommodation could be a good option for you.
Nowadays, finding rental accommodation is as easy as going online.
Sites like Easy Roommate and NZ Flatmates allow you to create an online profile, instant message potential housemates and see photos of a property before you inspect it.
Facebook rental community pages have also gained a lot of popularity in regards to share housing.
So, if you’re interested in listing a property or simply want to find a room, looking online is a great place to start.
How can we help?
If you’re in the market to buy property, regardless of how you’ve got there, the best place to start is by meeting with a mortgage broker.
A mortgage broker will be able to guide you on your borrowing power and tell you about any alternative income you could use to help service the loan.
Reach out to a mortgage broker to find out more today.