In today’s increasingly competitive housing market, many homeowners are looking for creative ways to alleviate the burden of their mortgage payments. One popular strategy is to seek out a flatmate to help cover the expenses. While this can be a tempting option, it’s essential to evaluate the financial and lifestyle implications before deciding. In this blog post, we’ll dive into the pros and cons of having a flat mate and help you determine if it’s truly worth it.
The Financial Benefits:
The most apparent advantage of having a flatmate is the financial relief it can provide. Splitting the mortgage payments can significantly reduce your monthly expenses and potentially pay off your mortgage faster. This arrangement not only lightens the financial burden but also offers the opportunity to save money for other important goals, such as investments, renovations, or building an emergency fund.
Additionally, having a flatmate can help you build equity in your property faster, by allowing for you to agree to a higher repayment value, therefore amortising (paying off) your loan faster. If you decide to sell in the future, the increased equity can potentially yield a higher return on your investment.
Beyond the mortgage payments, sharing other household expenses can further enhance your financial situation. Utilities, maintenance costs, and property taxes can all be divided among the occupants, resulting in substantial savings. However, it’s crucial to establish clear guidelines and expectations regarding these shared expenses to avoid potential conflicts or misunderstandings down the line.
While the financial benefits are undoubtedly appealing, evaluating the potential impact on your lifestyle is equally important. Sharing your home with another person, even if it’s temporary, can involve compromises and adjustments.
Compatibility and personal preferences play a significant role in the success of a flatmate arrangement. Before diving into this arrangement, ensure you have compatible living habits, schedules, and expectations. Open communication and clearly defined boundaries are key to maintaining a harmonious living environment.
Furthermore, privacy can be compromised when sharing your living space. You’ll need to be comfortable with having someone else in your home, potentially sharing common areas and facilities. Evaluate if you’re willing to sacrifice some personal space for financial gain. Potentially this is not a choice for some; make the wisest choice on a flatmate you can if it is a must have to meet your financial obligations.
Legal and Insurance Implications:
Before welcoming a flatmate, it’s essential to consider any legal and insurance implications. Review your local laws and regulations regarding tenancy agreements and ensure you comply with them. Consult a legal professional to draft a comprehensive agreement that protects your rights and clearly outlines responsibilities.
Contact the Experts:
If you’re considering a mortgage application and wish to obtain advice on whether the required lending approval involves a must have flatmate scenario, we can help. We can also advise on the practical side of how this may assist in repaying debt and building your equity/becoming debt free earlier. The team of friendly advisers at Rod Schubert Financial Advice (RSFA) specialises in mortgage lending and can guide you through decision-making. They can assess your financial situation, evaluate the risks, and provide personalised advice tailored to your specific circumstances. Visit www.rsfa.co.nz for more information. While having a flat mate can offer significant financial benefits, it’s crucial to carefully weigh the pros and cons before deciding. Consider the potential impact on your lifestyle, evaluate compatibility, and ensure you know the legal and insurance implications. By making an informed choice, you can create a mutually beneficial living arrangement that helps you maximise the value of your mortgage while maintaining a comfortable home environment.
This blog contains general information only. The opinions expressed in this article should not be taken as financial advice, or a recommendation of any financial product. Rod Schubert Financial Advice (RSFA) shall not be liable or responsible for any information, omissions, or errors present. We recommend seeking professional legal and/or financial advice before taking any action. Our Disclosure Statements are available on our website.