There can be life in dead money - Mary Holm

Monday 4 October 2004

Q: I rent my home and keep savings in the bank (a potential house deposit, because isn't buying a house what we're all supposed to do?) and often hear the "rent is dead money" comment from friends and colleagues who have already bought a home and are paying off a mortgage.

But surely the hundreds of thousands of dollars people pay in interest over the term of their mortgage is

By The Landlord

just as "deceased"?

I often wonder if there is a way of comparing the "rent-and-invest versus mortgage" decision 15 years into the future.

Say, Joe Bloggs has $170,000 from late Aunty Betty which he puts into long-term government bonds (or maybe some in cash, some in index funds), and pays $300 rent a week, whereas his sister Josephine uses her $170,000 as a deposit on a $340,000 house, with a 15-year mortgage.

Maths was never my strong point, but with vague recollections of net present value calculations, maybe you can help.


Read More - Opens in a new window
Commenting is closed

Property News

Changes to RTA announced

The Government announced its long awaited tenancy law reforms today and they mean that landlords will no longer be able to get rid of tenants without reason.

Commercial

Demand challenges for commercial sector

Vacancy rates in the commercial property sector are set to increase as changing economic conditions dampen demand.

Mortgages

LVR loosening likely - ANZ

LVR restrictions were never meant to be a permanent feature of New Zealand’s housing market and ANZ economists argue that some further relaxing of them could soon be on the cards.

Site by PHP Developer