House Prices

There can be life in dead money - Mary Holm

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

Monday, October 04th 2004

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.

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SBS FirstHome Combo 4.29
Unity First Home Buyer special 4.29
Co-operative Bank - First Home Special 4.85
China Construction Bank 4.85
ICBC 4.85
TSB Special 4.89
Kiwibank Special 4.89
ASB Bank 4.89
Westpac Special 4.89
BNZ - Std 4.89
AIA - Go Home Loans 4.89
Nelson Building Society 4.93
ICBC 4.95
SBS Bank Special 4.95
China Construction Bank 4.95
Wairarapa Building Society 4.95
TSB Special 4.95
ANZ Special 4.95
ASB Bank 4.95
Kainga Ora 4.95
Westpac Special 4.95
AIA - Go Home Loans 4.95
SBS Bank Special 5.39
Westpac Special 5.39
ICBC 5.39
Co-operative Bank - Owner Occ 5.59
BNZ - Std 5.59
BNZ - Classic 5.59
AIA - Go Home Loans 5.59
ASB Bank 5.59
Kainga Ora 5.69
Kiwibank Special 5.79
ANZ 5.79
SBS Construction lending for FHB 3.94
AIA - Back My Build 4.44
CFML 321 Loans 4.99
Co-operative Bank - Owner Occ 5.95
Co-operative Bank - Standard 5.95
Heartland Bank - Online 5.99
Pepper Money Prime 6.29
Kiwibank - Offset 6.35
Kiwibank 6.35
TSB Special 6.39
ASB Bank 6.44

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