Home Loan: Don't Let 'Peer Pressure' Bury You In Mortgage

A New Zealander who is likely to lose his job soon is warning people to not be swayed by peer pressure and take out a huge mortgage when buying a new house.     

A Reddit user who goes by the name 'StatementResident948' posted a microblog last week explaining his current home loan status.  

"Currently, my job pays about $42 an hour with an average yearly salary of $80,000. People were 'pressuring" [me] to buy a house at the upper end of what I could get from the bank at the $500,000 range.

"But I instead went for a cheaper house at $330,000. Now my place of work might be shutting down 70% chance it will [sic] and I will have to get another job, likely something on minimum wage."

The user went on to say he was glad he went in for a cheaper house as "there would be no way I would afford an expensive house earning minimum wage".

That advice might well be just in time if you are looking to take out a loan to buy a house. On March 5, 2024, credit reporting firm Centrix indicated a summer credit crunch and squeezed business and consumer budgets have sent debt arrears to the highest level in seven years.

It said as many as 480,000 consumers in New Zealand were in debt arrears in January, the highest since early 2017, making up about 13.1 per cent of active borrowers and nearly 10 per cent higher than a year ago.

People were quick to react to the Reddit blog by StatementResident948'. One user wrote, "Ditto my friend. at the end of 2020, I had banks offer to lend to me for houses up to $700k but bought for just under $350k instead. Literally saving me hundreds a week in interest right now."

Another user wrote he was in the same boat. "I agree, I literally has [sic] the same situation. When I applied for my mortgage, I was in 80k per year and purchased 550k house...You can always sell and upgrade later. Paying 5k a month brings a lot of stress to my friend’s family."

Another user reported he was at the wrong end of the stick when it came to home loans.

"I am sort of regretting buying a $970k new build house with $720k mortgage on a household income of $155k. We are surviving and also managing to save around $1k every fortnight but I kinda miss having a lot of disposable income and a lot less stress lol."