By Stevie Waring
Is the tiny house the answer for the struggling first-home buyer? Definitely “yes” for some; definitely “no” for others.
In recent years, it has become more and more difficult to be a first-home buyer in New Zealand and renting has become more expensive in many parts of the country.
Naturally, many people have come up with alternative solutions. Some students have chosen the “go big” alternative where you live with 10 or more people in the hope of splitting costs. Or you may want a waterfront property without the price tag? Enter the houseboat life. Or you may be a young person, family or couple that wants a home but have no idea how to fund it.
This is exactly where the tiny home revolution has taken off. The idea being that you can live a minimalist lifestyle in a carefully designed bespoke small space that is both efficient in space and cost.
Apart from the creativity and innovation of it, the biggest bonus of a tiny house is the price. You essentially pay for a standard base plan, and then you pay per room after that. It is totally customisable. It allows you to be creative and unique with your space while giving you the financial freedom to spend your money on higher quality items that may have been unavailable to you with a regular home, such as full insulation, solar panels or beautiful hardwood floors, for example.
So how do you pay for it?
In Wellington, the average house price is $639,112 (as of June 2018, QV.co.nz) but basic tiny houses are less than $100,000. That’s a no-brainer, right?
The short answer is that you can do it, but a bank won’t necessarily give you a mortgage for it.
If you see a tiny home in your future, here are a few things to consider:
· Where will you put it?
o If you’re planning to buy land, you may be able to use your KiwiSaver.
o If you have friends or family with some land, it’s probably easiest to put it there.
· Do you or family have an existing mortgage?
o If you or your family have existing equity in your property, you may be able to refinance it to access that cash to put towards your new tiny home.
Long story short: If you are looking to lead a simpler, more efficient lifestyle that is cheaper in the long-term, then this may well be the solution for you.
If you are looking for an alternative to buying a first home because you may not have the funds for a deposit yet, this may not be the solution for you.
As with everyone situation, there is often more than one answer, so give us a ring and we can talk through your options—big or small.