PhD students paying a mortgage

People often ask me how we could afford to buy a house on two PhD scholarships. If they don't ask, you can see them wanting to. Perhaps you're a PhD student considering buying a house? Here is a short summary of how it works for me:

1. The deposit is the hardest part.

For your typical PhD student who has entered straight from undergrad, raising a sufficient deposit to buy a house is not going to be feasible. Going it alone is very, very difficult. Even for the typical first home buyer with a 'normal career', saving enough for the deposit may require some assistance, particularly in these times of inflated house prices. I purchased our house together with my boyfriend, splitting the deposit requirements in half. Think carefully about borrowing money from parents and family members - if you need to pay this back, then you are decreasing how much money you can pay into the mortgage each week and effectively increasing your interest payments over time. However you do it, be prepared to see your hard-earned pennies vanish from your bank account after signing the dotted line, only to be replaced by an ugly red 'overdraft' balance.

2. How do the weekly payments compare to rental costs?

Depending on your usual flatting situation, your weekly mortgage payments may be almost similar. In our case, we were previously paying more into someone else's mortgage through rent than we currently do onto our own.

3. Be prepared for emergencies.

Although we could contribute less onto our mortgage, in reality we pay more compared to our previous renting situation. There's a strong incentive to pay more of your mortgage in the early stages to reduce the amount of interest you have to pay, and you may  decide that you need to pay more than you initially planned. Furthermore, owning a house incurs many more costs than just the minimum mortgage repayments. Unexpected breakages, insurance, and necessary renovations are 3 examples, so bare in mind that you could be faced with random costs that you hadn't considered previously, and you need to be prepared for these. As a PhD student, you need to be extra prepared, as a sudden loss of your stipend could leave you in a very uncomfortable situation.

4. Can you earn more money if necessary?

To most PhD students, this is not an easy option. Technically, we are not trained for 'real-world' jobs, and our skills are highly specific, making it hard to find other work easily. Teaching and tutoring is the most likely option, and one that I take advantage of, although it only only earns a sporadic income during semester times. I also have a part-time job outside of the university to tide me over during the semester breaks. Depending on your field, you may have specialist clinical skills that allow you to work part-time, as my boyfriend does. Be prepared to work on weekends and evenings to earn extra money as required.

5. Luck.

Don't discount the risk you are taking in a changing housing market. We were lucky to purchase our first home just before the massive surge in Auckland house prices about a year ago. When I speak to other people hoping to enter the housing market, I can't help but feel a sense of relief that we made the leap. But of course luck can swing both ways, and I can only hope that ours holds out until our theses are well and truly submitted!

The other question I get asked a lot is 'WHY did you buy a house?'. The answer is probably detailed enough for another post, but in short: 'it was worth it!'