Couple, aged 58, empty their KiwiSaver to buy their first home

- Tauranga couple used all of their KiwiSaver to get onto the property ladder

- They were sick of renting and were worried about their financial future

- “We are paying more now, but we are paying off a mortgage. The dollars are benefitting us.”

A Bay of Plenty couple in their late 50s who withdrew all of their KiwiSaver to buy a home will have to start from scratch again when it comes to saving for their retirement.

It also means they won’t have to rent for the rest of their lives.

Gary and Cheryl, who wished to use only their first names, moved to New Zealand from South Africa about 10 years ago and have been renting ever since.

This month, the couple – both aged 58 – bought their first home in Tauranga for $800,000.

“It is such a relief,” Gary said. “It means we will still be paying off a mortgage in our early 80s ... but the first week we are in our own home means we are paying off a mortgage. We will be paying off something of our own.”

The smart-looking property is in the popular suburb of Gate Pa. Photo / Supplied

Gary told OneRoof the couple were relieved to be in a home of their own. Photo / Supplied

The Bay of Plenty is the most expensive region to rent in New Zealand with a median weekly rent of $680, according to recent data. This month’s OneRoof Property Report showed the region’s average property value was $950,000.

Gary said it worked out to be a little more expensive than renting, but it was worth it to have their own asset.

“We are paying more now, but we are paying off a mortgage. The dollars are benefitting us.”

The husband and wife had to use all of their KiwiSaver and take out a 25-year mortgage rather than a full 30-year term to make it happen.

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“We had to use our full KiwiSaver. We could have got away with not using all of it, but the important thing was we had to pay the 20% deposit to benefit from the better interest rates.

“But if you’ve got your own home, it is a lot easier to survive later on in life than if you’re still renting,” Gary said.

“The KiwiSaver is a bonus but you need to establish yourself before you reach that point.”

Tauranga in the Bay of Plenty. The city's property market has become increasingly expensive for renters. Photo / Getty Images

Gary said he and his wife put in an offer on three properties during their three-month search.

But they were unsuccessful due to the properties either selling by auction, negotiation or multi-offer.

“You are told to put your best foot forward, but we missed out on all three and only by about $10,000 or $20,000. It is a vicious game out there.”

When a fourth property came up, the couple went to look at it straight away.

“The listing went up on Thursday and we went to see it on Friday.”

Gary’s advice to other buyers their age was to talk to a mortgage adviser.

Stuart Cooke, of The Finance Collective, says there's been an uptick in the number of people looking to buy. Photo / Supplied

“Everyone wants to buy their own home one day. A mortgage broker can help you reach that dream.”

Stuart Cooke, of The Finance Collective in Tauranga, said it was common knowledge the New Zealand Superannuation Fund was not enough to live on in this day and age.

“With the cost of living continuing to increase, if you don’t have KiwiSaver or other investments to help with your retirement then you end up working for longer than you wanted.”

Cooke said it was fairly common for people in their late 50s to be buying their first home.

“I see a lot of immigrants coming over to New Zealand later in life and are wanting to get onto the property market here.

“I have also had Kiwis living in Australia who have decided to move back to New Zealand in their late 50s buying their first home here.”

His advice to people buying their first home later in life was to not give up and to speak to a mortgage adviser.

“You may be surprised that you can own your first home in your late 50s and with the right advice, pay down your mortgage quickly.”

Cooke said there had been a “definite uptick” in the amount of people looking to get into the market since the Official Cash Rate fell 50 basis points to 4.75% – its lowest in more than a year and a half – and there will be more as interest rates continue to drop.

“In the short-term, we will see more activity in the market and banks putting out specials to entice more people to come to them.”

Bank test interest rates will continue to drop, giving customers the ability to borrow more than they could previously, he said.

“Unlike when we had 2% interest rates, we will soon see people’s borrowing being restricted by the debt-to-income ratio instead of bank servicing calculations.

“Longer term the debt-to-income ratios will effectively limit lending for customers and help to avoid property price increases that we saw in recent years.”

“Essentially, the cost of borrowing for customers will decrease.”

Homeowners coming off higher fixed-term rates were also wanting to understand what they should do when it came to re-fixing their mortgages, Cooke said.

“Being able to work with customers on the pros and cons of the different rates while helping demystify the longer term predictions on interest rates helps them to plan their cash flow and future investments better, resulting in better outcomes for them.”

The Finance Collective’s top five tips for first-home buyers:

1) The one thing you never have enough of is time, so starting to work with an adviser as early in the process as you can will allow them to guide you through what you need to do and when. A short time tends to lead to more stress!

2) Be realistic in the properties you are looking to buy. This is your first home and could just be the stepping stone to the next one.

3) Low deposit home loans take longer and have stricter policy from the banks. Work out what is affordable for you and communicate that to your adviser so they can help manage your expectations.

4) Pay off as much debt as possible before going for a mortgage. This will give you the best chance of getting a mortgage.

5) Don’t be afraid of the bank of mum and dad to help with deposits. Consider buying with some friends who are in the same position as you, but make sure you have a property Sharing Agreement in place so you all know what you can and can’t do.

- Click here to find more properties for sale in the Bay of Plenty