Can’t afford a mortgage? Other ways to buy a house

New Zealand’s competitive housing market means the quarter-acre dream now feels far off for many first home buyers. If you can’t afford to buy a house, or are struggling to save a deposit, there are some alternatives to traditional home ownership to look into.  

Find out more below about other ways to buy a house or invest.

Teaming up with friends or family 

Buying with a group certainly has its advantages - the more people contributing to a deposit and a mortgage, the more potential buying power. There’s a different ownership structure designed for buying with someone who’s not your spouse or partner, called ‘tenants in common’ ownership.  

This works by giving each person a distinct and transferable share of the home, unlike a joint purchase where you both own the whole property together. In a ‘tenants in common’ arrangement, you can split the purchase unevenly - for example, if you provide 40% of the deposit and your friend provides the other 60%, you can split the ownership stake accordingly.  

Buying a house with a group of friends or family is a serious financial and legal commitment. Make sure you do your research, get a good lawyer, and make plans for all eventualities.  

If you are able to buy a house with friends or family, make sure you’re all aware of the unexpected costs of buying a house.

Alternative living arrangements 

With an increase in house prices has come an increase in alternative living arrangements, sometimes called co-housing models. This includes things like buying a section with friends and building two houses, developing new builds where some spaces are communal, or buying into co-housing developments like Wellington’s Urban Habitat Collective, which we’ve written about previously in OnMAS magazine. This is a concept that’s gaining traction as people look for more community-driven ways to live, but can require a lot of financial and legal groundwork too. 

Tiny houses 

Tiny houses are compact dwellings that are built on trailers to circumvent planning rules. They’re often set up in rural areas or on city fringes, as they require vacant land that has water and power connections. While it’s certainly not an option for every lifestyle, tiny houses can be an affordable step towards home ownership. They’re significantly smaller than a traditional home, which means a smaller price tag, and they can act as a place to live while you save for a deposit for a regular (non-tiny) house.  

Because they’re usually not seen as ‘houses’ in the eyes of the law or councils, the regulations around tiny houses are different. You can’t withdraw funds from your KiwiSaver account to put towards buying a tiny house, and you won’t be able to get a mortgage for one either, but some lenders might give you a personal loan towards the cost instead.

Investing 

If buying a house isn’t on the horizon for you at the moment but you still want to put your money to work, there are other ways to get returns. Think about putting some of your money into shares, investment funds, or other intangible assets. There’s often a low barrier of entry to these investments - most funds or platforms require less than $100 to get started, a stark contrast with the significant deposit you need to be able to buy a house.  

They’re more liquid too, so you can cash out quickly if you need the money for something else. You can even invest in property funds and companies, which could mean benefitting from the property market’s success. 

If you’re thinking about buying your first home, MAS has seven responsibly invested KiwiSaver funds to help put your money to work. Find out more about saving for a home or investing with MAS.