The costs of owning a home

Hi friends,

Today I'd like to share with you all the costs & expenses I've come across as a homeowner. Everyone's experience is different, so this is tailored to my personal expenses - after all, my house is no luxury beachfront villa; it's a modest, free-standing house in a safe and sensibly priced suburb. I thought it would be interesting to share what I pay for now that I own a home vs. when I was renting, and hope it will be helpful to both other homeowners and future homeowners with my transparency.

What costs do you think of when you think of buying a house? Personally, I think it's so easy to simply think of the purchase price and mortgage payments - plus mortgage protection if you want that peace of mind. I obviously knew there was going to be more, but now that it's been two years, I truly have a fuller picture to share with you all.

But first, some background..

What did I pay as a renter?

Here are my rents over the years..

2011 | $180 per week for my bedroom in a two bedroom apartment on Upper Queen St, Auckland, including power & water. Somehow, we went without internet for a whole year (I did everything at uni). And yes, that's right - you used to be able to rent a 2 bedroom inner city apartment for only $360 a week!

2012 | $140 per week all expenses included in a 3 bedroom apartment on Federal St, near the Sky Tower in Auckland City. I had to share a room, so even though the girls were lovely, fortunately I didn't stay for long!

2013-2014 | $205 per week for my bedroom in a two bedroom apartment at Soho Apartments, Wellington Central, plus water, power, and internet. The prices were astronomical.

2015-2016 | $200 per week for my bedroom in a three bedroom house in central Takapuna, all expenses included. (Very generous!)

2016 | $160 per week + $20 expenses for my bedroom in a four bedroom house in central Takapuna. At the time, the $20/weekly or $40/fortnightly savings made a huge difference.

Then I bought my home and moved not too far away on the North Shore!

I now live in my own home with my partner and his best friend, so our household consists of 3 adults.

Now that we have some background, here is everything I pay for as a homeowner..

Home Insurance
What I pay: $32.51 per fortnight

First: home insurance. I currently protect my biggest asset with Tower Insurance through Trade Me as members receive a 15% discount on premiums (20% at the moment during their birthday promotion). Along with my no claims bonus, good security (alarm), and no-frills policy, it's very reasonably priced. It's also a home only insurance policy. While it's usually in your best interest to combine your home & contents for both price and simplicity, after my partner moved in,  fortunately I was protected under his contents policy - at the insurance company where he works and where we met - at 50% off!

Rates
What I pay: $73.48 per fortnight

As a homeowner, your rates help fund public transport, clean, green public parks, weekly rubbish & recycling, and running libraries & other community facilities - in Auckland Council's words, 'the things that make Auckland a great place to live and work' (and I agree! I use my local libraries a lot; they're absolutely brilliant). Luckily in the two years that I've lived in this home, my rates have reduced twice and keeps going down!

Water
What I pay: $40-50 per month

I pay for water monthly, also to Auckland Council. Compared to my water bill when I was renting in Wellington, it's very affordable (if you know Soho apartments in Wellington, you'll know they cost a fortune for the central location and stylish, modern building). I'm not sure how it compares to other homes in Auckland, but would be curious to find out.

Power
What I pay: $50-60 per fortnight

Of course, there's also power. I've been very happy with Electric Kiwi's service, and love that they're an entirely digital independent New Zealand company - they got my power up and running in record time and have been reliable ever since. As I haven't tried any other power company, I can't be 100% sure how much of a difference it makes, but the daily 'Hour of Power' where our household enjoys free power is pretty sweet. I take advantage of this by charging my devices and turning on the dishwasher and washing machine at the same time every night.

Fibre Internet
What I pay: $85 per month

We have unlimited Fibre internet through 2degrees because 1) it's one of the few telecommunications companies I still trust, 2) I get a little discount for having my mobile plan with them. Hooray!

Transport
What I pay: $19 per week

You might be surprised to see transport here. Transport? Doesn't that belong to everyday expenses? I decided to include this here because I once read a personal finance tip that really stuck with me. The house you choose to buy or rent is so much more than just the house and where you live. It determines the size of your mortgage, how much your insurance is (based on risk in the area), your rates, maintenance, other living costs, and of course, the time it takes you to get anywhere. Where you choose to live fixes the new minimum amount you can expect to pay for fuel or public transport. In my case, if I take two bus journeys a day at $1.90 each way, 5 days a week, I have to top up my AT Hop card by at least $19 per week.

Other fun things..

On top of these, there are other fun things to think about. I also pay for lawnmowing every 3 weeks, and maintenance every so often - such as replacing lightbulbs and minor fixes to things like shower heads and downpipes (definitely not due to my carelessness.. It wasn't me!).

But the most actually fun thing you pay for as a homeowner? FURNITURE!

I started with the essentials. When I moved in, I had four brand new purchases: a fridge, microwave, TV, and washer dryer combo. I brought along my own sofa bed I'd bought when I was renting. Six months into my time at the house, one year into our relationship, my partner moved in and I sold my TV as we upgraded to the larger one he already had.

We then continued upgrading as we went along, one thing at the time - from a kauri wooden shelf to a more modern, chic white cube shelf, and from a wooden desk to a fantastic white, glossy desk-shelf combo that rotates. I absolutely love it.

A year after living in the house together, my partner and I invested in some wonderful, thick blockout + thermal curtains. We spent $260 on them at Curtain Studio during a sale and saved money on the installation service by installing them ourselves one long Sunday afternoon. And what a difference it makes! We used to have white curtains and I loved how the sun shone through them; but now, we can see the TV clearly even on a sunny day.

Because they are thermal curtains, they are also supposed to trap heat, so along with the insulation, help to reduce the power bill by keeping the house warm and dry in winter.

I chose to invest in quality brands for important things like appliances, but went for inexpensive when it came to the little things. None of our furniture or home decor is particularly expensive or luxurious, but our home feels like a home because of the small touches: a glowing Himalayan salt lamp, gold gilded agate crystal coasters, large framed art prints from independent creative artists on Etsy and Society6, homemade scented candles, and refreshing greenery & indoor plants - we have several Peace Lilies that are easy to care for and look full all year round!

Starting simple and upgrading as we go is one of the best things we did, and is much better than borrowing or going into debt in an attempt to make everything absolutely perfect. It's been two years and it may be two years more, but our dream home is worth the wait.

But one day? I hope to live in an apartment again. It's peaceful in the suburbs, but in my heart of hearts, I'm a city girl who loves bright lights, a good view, and minimalist living (the small space makes life simple.. Also why I want to try #vanlife). But apartments come with limitations - carparks, pets, Bodycorp fees - and are now costing as much if not more than actual houses, so who knows? I'll make the most out of suburban life while I can.

Love,

Sophia

My personal home buying experience (Auckland, New Zealand)

In 2017, I ticked off one of my bucket list goals: to buy a freehold property. And by tick off, I mean literally – it had long been written in my kikki.k Bucket List Journal, alongside goals like ‘Go to Japan’, ‘Try anti-gravity yoga’, ‘Go to Tomorrowland in Belgium’ and ‘Fly a plane’. Needless to say, it was a dream come true.

After I shared the news, I got asked more or less the same questions from friends & acquaintances alike. So I’d love to share my home buying journey and what it was like, as a recount of my personal experience.

The first thing I did was educate myself on KiwiSaver and how it can help you to buy your first home. I researched the eligibility criteria and house caps, then went ahead and applied for the HomeStart Grant. Since I’d been contributing to KiwiSaver for over three years, I was confident I’d be accepted. So when I received my pre-approval, I was ecstatic!

As an individual, however, it was tough for me to find a house within the Auckland house caps – at the time, $600,000 for an existing property, or $650,000 for a new build. I felt discouraged after doing endless searches on Trade Me and never finding any houses that weren’t in the middle of nowhere, or tiny apartments with body corps.

I subscribed to Trade Me’s email alerts by searching within my preferred region, local district, price range, and property type, saving the search, and choosing my preference on how often I wanted to be alerted of new listings. I repeated this email subscription process everywhere, including Property Press, where you can subscribe to the latest listings in the area you’re looking.

I’d looked for a year or so before I gave up, then started looking again a few months later. This time, after months of searching on Auckland’s North Shore, I fell in love with several properties. A quiet unit in Hillcrest appealed to me for its simplicity and privacy, but unfortunately had a tandem garage. (Different to a double garage, I personally thought this would be a huge inconvenience.) I also loved a chic little unit in Milford, which while stylishly furnished with monochromatic decor, was in reality half of a home that had been split into two.

How I found my future house was serendipity. On the same day I went to the Milford unit, I was almost not going to stop by another property, this time in Glenfield. But very luckily, I thought, ‘Might as well’, and went to view it. To my pleasant surprise, it wasn’t a unit this time, but a freehold, freestanding house!

At first glance, it wasn’t very appealing. Unlike a lot of staged open homes, it was plain and unfurnished, so I wasn’t instantly enamoured with it as I had been with the previous properties. Once I took on a more logical and grounded perspective, in reality, it was absolutely wonderful: two spacious bedrooms with an open lounge & dining area. A carport that provides cover to the house. A kitchen with a generous amount of drawers, shelves & cupboards. (I found out later that a previous owner was a cabinet maker.) A front yard and deck, big enough to fit an outdoor dining table and lounge set. Additionally, it was in a fantastic location close to shops, eateries, bars, doctors, dentists, pharmacies, public transport, and more.

Compared to countless homes on sale by negotiation or by auction, it was also refreshing to see a clear asking price of just under $700,000.

At this point, it was time to prepare for the paperwork by finding a local solicitor and applying for the mortgage.

The first thing I did was play around on my bank’s mortgage calculator, or home loan calculator. It works out approximately how much you could borrow based on your income, assets, debts, and expenses, plus what your repayments could be. I experimented multiple times to get an accurate idea. Then I called my bank for an appointment, asking, “I’d like to find out if I can get a mortgage – if I can, how much I can borrow, and if I can’t, what I would need to do to be able to.” At the time, I also had debt, which I disclosed straight away.

I was lucky to be taken care of by a friendly, down to earth, and experienced banking adviser. She assured me my debt wasn’t actually very much in the grand scheme of things (phew!). Then she sent me an email with an application form, which I completed and sent back with my documents.

The next day, she got back to me with good news: a conditional approval! Also called ‘pre-approval’, this allowed me to look at houses within a certain price range. (I remember her saying, “This is great news, I am so excited for you!” This genuine customer service made a huge difference and is something I still clearly remember and appreciate about one of the most significant purchases of my life.) It’s notable that the amount I could borrow was fairly accurate to the amount the online home loan calculator had told me, give or take a few thousand!

After deciding on the house, it was time to negotiate. My house wasn’t on sale as an auction, but had an asking price. I’d cross-referenced different websites to get a rough figure of what the house was worth today, so I knew what was reasonable.

That night, the real estate agent went back and forth between the vender and I while we negotiated the price. I increased my offer twice before I made my third and final offer. The vendor decided to sleep on it, which made that night a nerve-wracking and sleepless one.

But the next day came – and they accepted!

Now that it was on a conditional offer, I had to set some conditions. What conditions you set will be different for everyone. For me it was 1) a building inspection report and 2) a meth test. These were to be done within a certain time frame, which could be 7 days, 10 days, or any other time frame agreed between you and the vendor.

Both passed satisfactorily, which meant that it was now unconditional!

I went into the bank to get the mortgage set up and finalised. Personally, I preferred the certainty and ability to budget with a fixed mortgage rather than a floating mortgage, while half fixed, half floating was also an option. A huge bonus is still being able to make extra repayments on top of fixed monthly repayments, incurring early repayment costs of only cents! For me, it worked well.

The bank’s condition was that we purchased home insurance, which was straightforward as I worked for an insurance company at the time, was familiar with the home insurance process, and received a discount.

A lot of people are confused as to what to insure their home for. It’s not how much you bought the house for, but the rebuilding cost – how much you would need to rebuild the house if it was, for example, lost in a fire. However, it excludes land value. You can get a professional quality surveyor or find an online calculator. Note that what you want is a rebuild cost valuation, not a market valuation.

The good news is, the rebuilding cost is usually significantly less than the purchase price – keeping your home insurance premiums low. You’ll also earn discounts if you have a securely monitored alarm, have an owner occupied property, or combine your home insurance policy with your contents & car insurance policies.

I paid my deposit, which was 10%, and waited for the settlement date, which had been decided earlier on the night we negotiated the price. On settlement day, the rest of the funds were paid from the bank to my solicitor, which were then paid to the vendor’s solicitor. I met up with the real estate agent to collect the keys, and arranged to get power, water, and internet up and running. The official Sale & Purchase Agreement was emailed through, naming me as the owner of the house in North Auckland!

In the end, I didn’t use my KiwiSaver HomeStart Grant because the price was above the house caps, but what I did make good use of was my KiwiSaver First Home Withdrawal. You can withdraw your entire balance, minus $1000, and that’s exactly what I did. 

Here are just a few things I wish I’d done earlier:

• Saved more to borrow less – a pretty obvious but crucial one, especially with interest to take into account.

• Had a higher Kiwisaver contribution rate. I was on the default of 3%, and have since increased it to 8%. If I were to do it again, I’d increase it to the new maximum rate of 10% if possible.

• Been more patient and persistent – it takes time to find The One.

• Considered all the factors and looked at the fine details (ceilings, walls, window sills, things in need of repair etc). It’s a great idea to bring along your partner, friends and family to view a property. They may notice things you don’t see!

• Considered a buyer’s agent. Buyer’s agents are like real estate agents, except they work for you and act in your best interest, not the seller’s. They also liaise on your behalf, potentially saving you many time consuming drives, phone calls, negotiations and headaches.

I hope that this was helpful to you! Check out the resources I used below:

+ Housing New Zealand – Ways We Can Help You to Own a Home (including KiwiSaver)

+ Trade Me Property and Property Press – remember to save your search + sign up for email alerts if you wish.

+ Sorted Mortgage Calculator – I used my own bank’s one, but to be impartial I’ll link this one, which is just as helpful. It’s a good idea to shop around the banks to see if they have any special promotional rates or rewards currently going – from what I've seen, you could score a holiday, earn extra cashback or score a discounted banking + insurance package!

+ Electric Kiwi – Their customer service was amazing. Electric Kiwi, an independent and 100% online company, got my power up and running - remotely - in less than 30 minutes after a quick online chat.

+ Settled.govt.nz – Brought to you by the Real Estate Authority (REA), this is a new website that guides New Zealanders through buying or selling your home. I discovered this from my volunteer work at Citizens Advice Bureau, where volunteers like me are happy to help you with any questions you may have about the home buying process - or just about anything, really!

If you are an aspiring homeowner, good luck, and I wish you all the best!

Sophia