Best approach for first property?

Question from Jessica updated on 21st July 2015:

I have two questions. Firstly, my partner and I are looking to buy our first property in Auckland. We're currently on two incomes and have no children, but we expect this to change in two years. We have two approaches in regards to what we can afford: Firstly a two bedroom unit on the city fringe - as we know there is good capital gain happening - with the idea to sell in a few years and move into a family home in our ideal location. OR buy a home in the location (Titirangi) we like now with the view to stay for longer but with much lower gain. The problem is what we can afford now is very different from what we can afford on one income. Hence my second question: I earn significantly more & I'm worried that when I have a baby I'll be pressured to go back to work too soon. We have been advised we could top up the mortgage at this time, but I'm not sure which is the best way!

Our expert Kris Pedersen responded:

This is a very subjective question but one which is worth answering. As no one can exactly say what gains we will have over that time period, I would recommend the second option due to it being safer. However, I recommend you do your own research and come to your own conclusions in regards to what growth you believe to be likely in each suburb. Keep in mind that if you go for the second option, while you may miss out on a bit of gain, you may have more stability. This will allow you to reduce debt more quickly before you drop to one income. Also, don't forget that with going with option one you will have agents / moving costs plus the time cost of finding another property which you need to take into consideration as well. 

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies.

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