First Home Buyers Calculator: what’s best - Renting or owning?
The new home buyers calculator has been designed to make it quick and easy to estimate the weekly cost of buying your next home. Just enter the following information in the calculator below to work out your weekly cost of ownership. There are more tips below the calculator to help you get started.
Current rental details: Entering your current combined weekly rent for you (and partner) will help calculate whether its better to rent or own right now.
Purchase details: How much are you paying for the property? Check out maximum purchase price allowed if you are using Kiwisaver HomeStart Grant
Can you rent out any rooms?: Are you renting out a room or buying a dual income or home and income property to help subsidise the mortgage? Add expected average weekly rental income here.
Now let’s add property expenses: This is we add the extra costs you will have that you don’t have when renting e.g. Council rates, property insurance and bodycorp (apartments).
Let’s work out your deposit: How much cash do you have saved? Start with the maximum and then adjust downwards if you plan to borrow a larger amount. You maximum mortgage is likely to be 90%, so adjust your deposit details to make sure you achieve this.
Are you using the Kiwisaver HomeStart Grant?: Read the criteria for eligibility details. It provides a couple (2 buyers) up to $20,000 as a grant towards their first home if its new (or $10,000 if second hand).
Buyer 1 & 2 Years in Kiwisaver: If yes to above, select the number of years each buyer has been in the Kiwisaver program.
Contributions or loans from anyone else?: Add family loans, vendor rebates and anything else at all that can help with your deposit.
Amount to borrow: After deducting your cash deposit, how much will you borrow? If you are using equity from another property as security, enter the purchase price as the full amount to borrow.
Total deposit available: This is the total deposit you have at your disposal to contribute toward your purchase from all cash, loans and grants sources.
Mortgage amount required: This is your purchase price less your total deposit available. To adjust mortgage amount, simply increase or reduce the deposit by making adjustments in the deposit section above.
Mortgage interest rate: This is an interest only calculator to help you check minimum affordability. Enter the interest rate you can borrow at to buy this property.
% to borrow: This is the percentage of the purchase price you will need to borrow from a bank. You can borrow 80% to 95% of the purchase price depending on your circumstances, but 90% is the general maximum. You may pay a higher interest rate when borrowing at a higher debt percentage. Talk to an experienced mortgage broker.
Cost to own this property: This is the average amount you will pay weekly once rental income (from flatmates/tenants) , property expenses and mortgage payments are combined.
Owning versus renting - what will you save? If this number is positive (i.e. not starting with a -), then this is how much better off you will be each week financially by owning instead of renting.
Average annual capital growth for this suburb: This will vary, but 5% - 8% per year is the long term average for most metro areas with positive population growth. Regional areas will vary. This helps you work out how much your equity (wealth) will increase over the next 10 years from owning this property. If unsure 5 - 6% is conservative.
Property value at end of 10 years: Forecast property value based on capital growth rate you selected above.
Equity gained after 10 years: The difference between the property value in 10 years and what you paid for the property at purchase.
Wealth created owning vs renting after 10 years: When you add up the rent you pay over 10 years and compare it to the mortgage payments, rental income, property expenses (without adjusting these costs for inflation) and then factor increase in this property’s value, this is how much better off you will be financially over the next 10 years by buying this property.
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