Key Facts

  • David Thomson, a self-employed builder, and his wife are facing financial difficulties with their retirement home, which they are unable to sell.
  • The couple took out a second-tier loan at a high interest rate of 13.6% for their house, and are now struggling to pay back the debt.
  • They planned to subdivide their property with the hopes of selling the sections to alleviate their financial stress, but the market crash and high subdivision costs left them with a higher debt of $960,000.
  • Thomson’s wife became redundant, which further increased the couple’s financial pressure. Their loan repayments are more than their combined income.
  • The property was listed on the market for $1.35 million, but has since dropped to $1.150 million.
  • The couple hopes to eventually refinance their property if market conditions improve.
  • Mortgage broker Glen McLeod notes that many people are facing similar situations due to the effects of Covid and changes in the housing market.

Article Summary

David Thomson and his wife are in a tight financial situation with their retirement home on a 17.5-acre property near Kaiwaka, north of Auckland. They worked full-time and spent evenings and weekends for seven years, building their home. Unable to secure a traditional bank loan, they opted for a second-tier financing plan with a high interest rate of 13.6%.

The couple initially had a debt of $400,000 after building the house, which was valued at $875,000 because of their hard work; however, the market conditions and their financial circumstances began to take a downturn as the housing market spiked and then crashed. The Thomsons attempted to subdivide their property in hopes of selling off the sections, but unexpected high costs and market saturation left them with a higher debt of $960,000 and unsold sections.

Financial struggles continued to mount when Mr. Thomson’s wife was made redundant. Their loan repayments exceed their total incomes, making it difficult to stay afloat. They listed their property on the market but have had to lower the price from $1.35 million down to $1.15 million due to lack of interest.

This story reveals the precarious financial situations many people can find themselves in due to market conditions and external factors like the Covid pandemic. Mortgage broker Glen McLeod shared that he is seeing increasingly more people in similar circumstances, struggling with mortgage repayments and trying to navigate the turbulent housing market.

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