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Remember back to 2020, a year full of uncertainty, stress, and worry... What kind of person would be crazy enough to buy a house in those times?! Well, that person was me.
In 2020, while the world was in lockdown, my partner and I embarked on our journey to become first home buyers with a 10% deposit. However, our path was far from smooth. I was juggling studying and working, while my partner worked as a builder. Both of us were on low incomes, burdened with student loans, credit cards, and other debts. We were barely making ends meet, paying $350 per week for rent.
At that point, we decided that renting wasn't for us. We wanted to invest in our own home, pay off our debt, and have the freedom to renovate as we pleased.
When we initially approached the bank, they offered us around $250,000. Considering our deposit, this meant we had approximately $275,000 to buy a house, which was insufficient for the desired location of Kapiti.
So, we turned to my family for help. We asked if we could move into their home to save money and pay off our debts, ultimately putting ourselves in a better position to purchase our first home. Fortunately, my parents agreed, but they set a condition: we had two years to stay, paying $50 per week each, buying our own food, and then we had to move out. It was a challenge we accepted willingly.
We knew that if we wanted to buy a home on our own, we had to work hard and make some significant decisions. We jumped in with full force, changing jobs and careers to increase our income. We paid off as much debt as we could and saved diligently. Everything seemed to be going according to plan until... COVID-19 happened.
We had been house hunting for about a year when the pandemic hit. I vividly remember the impact on our KiwiSaver accounts. One morning, my partner checked his KiwiSaver balance and discovered it had dropped by approximately $10,000. This was terrifying because a significant portion of our deposit was in KiwiSaver.
Our ideal location to buy was Kapiti, preferably Otaki. However, the bank's initial lending offer of around $250,000 made it clear that we couldn't afford a house in Otaki. Thus, we had to look a bit further north to Levin. We started attending open homes in Levin that fell within our budget, and let me tell you, we encountered some truly nightmarish properties.
While we were open to purchasing a run-down house since my partner is a builder and we were confident in our DIY abilities, most of the houses we saw were unliveable. Two properties come to mind.
The first one was situated on a main road in Levin. Initially, it seemed okay based on the listing photos and the fact that it fit within our budget. However, when we arrived and entered the house, we were immediately hit with a putrid smell. The carpets were soaking wet, reeking of cat urine and mould. The kitchen was falling apart, and the overall layout of the house was bizarre, with the requirement of passing through the master bedroom to reach another room that was supposedly the lounge. I remember my partner asking the real estate agent about asbestos and the apparent extension at the back of the house. The agent discreetly confided that she wasn't sure about the asbestos, but if we could keep it to ourselves, she would appreciate it. The whole situation seemed quite dodgy.
The second property was equally disappointing. Despite its beautiful gardens and old villa-style charm, the interior was in terrible condition. We were directed away from the front door and asked to enter through the back. As we stepped inside, we found ourselves in a "laundry" room that was tiny and lacked a door handle. From there, we walked into the "kitchen," which shockingly had no floor; the entire floor had been ripped out, leaving only dirt. The issues continued to pile up: a cracked and leaning fireplace, uneven and hole-ridden floors, non-functional lights, a bathroom without a toilet or shower, and a basin tap awkwardly stuck in the wall without a basin beneath it.
Needless to say, we felt discouraged. However, COVID-19 somewhat played in our favor. With everyone in lockdown, house hunting virtually halted. It also allowed us extra time to save more for a deposit and pay off more of our debt (not being allowed to go anywhere really helped!).
During this period, we stumbled upon a property in Otaki Beach that had two bedrooms, two bathrooms, and a renovated garage-turned-sleepout. It was perfect! Not only was it livable, but it also didn't require major renovations—just some painting and minor touch-ups. Unfortunately, it was slightly above our price range, but we reapproached the bank with our new higher deposit and lower debt level and were surprised when they offered us a preapproval of $500,000—a huge difference from our original $250,000 approval!
However, as the lockdown continued, we kept a close eye on the property and were surprised to see the price drop by $25,000, falling within our new budget.
The first weekend after the lockdown, we seized the opportunity to view the property and investigate why the price had decreased. The real estate agent explained that the price reduction was due to the elderly client's desire to sell quickly and a builder's report that falsely claimed the cladding needed immediate replacement. My partner, being knowledgeable about cladding, knew that it did not require immediate replacement (it has been three years since then, and we haven't faced any issues), and we were confident that we could handle it ourselves if necessary. We made an offer, and to our delight, it was accepted.
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Due to COVID-19, the vendor requested a longer settlement period to accommodate clients currently living in the property, giving them extra time to vacate. From going unconditional to settlement, we had to wait approximately three months. Luckily, this provided us with additional time to save money and hope for a recovery in our KiwiSaver.
Everything went well, and we ended up with more money in our KiwiSaver accounts than we needed. We saved a bit more, using the surplus to purchase furniture for our home. After living with my parents and having no need for furniture, we didn't even own a couch, bed, or pots and pans. But despite that, it didn't matter because we were finally homeowners!
I still remember our first night in the house vividly. We sat on the floor in front of the fire, enjoying takeaways and a glass of wine, simply smiling, and laughing. All the hard work we put into paying off debt, saving money, and living with my parents for two years had been worth it.
However, our bliss didn't last long. We soon faced our first issue, which made us realize that homeownership comes with its fair share of challenges and unexpected expenses. We discovered a leak in our roof, originating from a cracked pipe connected to the shower. The water had been leaking for an unknown period, damaging the roof, walls, and ruining the carpet in our hallway. Fortunately, my partner was able to fix the leak and repair the ceiling. We had already planned to replace the carpet with floorboards, so the damage wasn't a major setback.
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You might be wondering how we fared with the increasing interest rates. When we bought our home, we initially fixed our entire mortgage for three years at an attractive rate of about 2.90%. However, once I started working in finance and mortgages, I realized it might not have been a wise decision. To safeguard ourselves against potential rate increases, we decided to break our fixed term and seek advice from a mortgage adviser. Ultimately, we split our mortgage into three different loans, each fixed for a different period of time. Thank goodness we did! Instead of our entire mortgage coming up for refix this year, with rates skyrocketing to 6.5% or more, we only had one loan up for refix. One of our loans is still fixed at 2.55% until mid-2024. While the repayments on the refixed loan increased by $180 fortnightly, we had been making extra payments while the rate was lower, so the increase wasn't too burdensome.
Being a first-time homebuyer certainly comes with its challenges, but my advice is to persevere. It is all worth it in the end. There will be unexpected issues and repairs (that's why insurance is important), and interest rates will fluctuate (that's why budgeting and seeking good financial advice are crucial). There will be trying times, but you will also create lifelong memories. You'll explore countless houses, fall in love with a few, and perhaps miss out on some, but eventually, the right one will come along.
Suzanna.
About Suzanna
Hi, I’m Suzanna. I am a Client Services Manager/Loan Writer for Graham Goodisson’s team. As well as Graham, I will be alongside you from the start of your house hunting journey until you find a home, as well as helping to maintain your loans in the future. It is my job to prepare a mortgage application making sure that I present you and your situation to the bank in the best possible way. I will also help you with top ups, restructures, refixes and anything else you may need. I have recently bought my first home and understand how stressful it can be, we are here to guide you through the process, helping to take some of that stress away. When I am not working, I study part time and like to spend a lot of time with friends, family, my pets and working on my house renovations.
Always get professional advice
The information shared in this post is meant to be general guide to support you on your journey. When making important decisions about your finances, we encourage you to seek independent financial advice first, tailored to your unique situation. As well as talking with a financial adviser, make sure you talk to your lawyer and accountant too – together they'll help you find the best solution for your specific situation. Our knowledgeable financial advisers are here to help. Check out our website for the details about our financial advisory services in our disclosures https://www.velocityfinancial.co.nz/disclosure-statement.