Deposit is the priority

Eloise has little debt to worry about so ...

QI’m36 with a 44-year-old boyfriend. I work full time with a pre-tax and pre-super income of $73,500; my partner has a post-super and post-tax income of $45,000. I have no debt other than my New Zealand student loan of $19,000, which I pay at about $100 a month.

My boyfriend has no debt other than the $15,000 owing to a family member for his share of their jointly run small business (which is paid out of the business profits). He also supports his ageing parents (they live in a country without a pension) by sending them about $300 a month.

I have $60,000 in superannuation and make additional salary sacrifice contributions of $100 a month. My boyfriend has a nominal amount in super. Combined we have savings of $30,000.

Should we seek to pay off all debts before buying our first home? Or, given the rate at which house prices are rising, buy something as soon as we get enough for a deposit? Should I put more money in my super or put any extra money towards buying a property? Given my partner’s age I’m concerned that soon we may not be able to get a home loan with a standard 25-year term.

Hi Eloise. It is very rare for me to tell anyone to ignore their debts but in your case that is exactly what you should do. Your New Zealand student loan, as I understand it, is similar to the system here and has very generous repayment terms. As it is a family loan, I suspect your boyfriend also has very realistic terms on his loan.

At age 36, while super top-ups will really add to your retirement benefit you have some 30 years to go to retirement, so I feel that building a home deposit should be your top priority.

I am a strong supporter of home ownership, so I do agree that buying a place to live should be a priority. With a joint income of some $120,000, a good deposit and no high-interest debts, I am sure you will be a welcome client of any lender. I would do some research and find out what your borrowing capacity is. Please do not over-borrow, though. Interest rates are the lowest they have been in my lifetime and at some stage they must move up.