Lucia Xiao

PHOTO: Lucia Xiao

One of the biggest fears when thinking about home ownership for first timers is the idea of a ‘lifetime of huge debt’. Believing that this ‘debt’ will be a hinderance on their life goals and dreams. Which leads to many young people choosing to pursue their other life goals like an overseas experience or starting a business before ‘settling down’ with a house purchase.

My whole reason for doing what I do as a property mentor is to clear up the misconception and belief that owning your own home limits you, in fact, it can be the choice that enables you to live the life you want and achieve the dreams you wish pursue, sooner than you would have thought possible.

‘But how is (potentially) millions of dollars of debt help anyone?’ You may be asking…

Simply, a mortgage is a cheap way to access money. Especially in this era of historically low interest rates that are likely to stick around for a long time.

For example, if you wanted to save approximately $10k for that epic overseas holiday (if only we could travel right now!) or a car purchase, you would need to save nearly $200 per week for a year to have the cash to do so. However, if you have a property with available equity to access almost instantly, it will only cost you $9 per week (over a 30 year term based on Westpac’s latest rate announced on Monday of 2.29% 1-year fixed).

That’s $200 vs $9 (per week)… which one is really more of a hinderance on your lifestyle?

Yes, there are other forms of lending like credit cards, personal loans etc. but as I’ve covered off in my in previous articles, these are bad debts and none of these give you the ability to pay off over a term like a mortgage, they’re also on much higher interest rates and these options can get so many people into stressful and sticky financial situations.

I’m definitely not suggesting you use every available dollar of equity on things like holidays and cars! Your property can be a great leveraging tool to invest in yourself, like education, starting your own business or invest to fast track to financial freedom like growing your property portfolio.

If you prioritise purchasing your own home as soon as you’re able, you’ll thank yourself for it no time, with the freedom it will allow you to have whilst also securing your future with your investment in valuable asset. Although just like any investment, you need to make sure you’re making the right choice and buying the best first property you can afford, that will enable you to move forward with your goals. If you would like to learn more, make sure you come along to one of my regular ‘How to Buy or Invest in Auckland Property’ workshops where I cover this and more in detail.


Lucia Xiao  

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