Is It Worth Getting a Flatmate to Help Pay My Mortgage?
Buying a home is a major financial commitment—and meeting those regular mortgage repayments can be daunting, especially in New Zealand’s current high-interest environment. So it’s no surprise that many homeowners are exploring ways to ease the financial pressure, including welcoming a flatmate into their home. But is it worth it?
If you’ve got a spare room sitting idle—used only a few times a year for guests or as a glorified gym gear graveyard—it could be working harder for you. That empty room could be your ticket to shaving years (and tens of thousands of dollars) off your mortgage.
The True Cost of a Spare Room
It might feel like a luxury to keep a spare room for friends or family who visit occasionally. But consider this: from a ‘per use’ perspective, a guest room is one of the most expensive parts of your house. It takes up valuable square metres, adds to your mortgage costs, and often ends up storing unused exercise equipment or boxes of stuff you’re meaning to sort through.
Now, imagine that space earning you money—money you could funnel directly into your mortgage. It might not be your dream scenario, especially if you're a private person, but the financial payoff can be significant.
Crunching the Numbers: What You Could Save
Let’s say you’ve got a mortgage of $800,000 at a 4.25% interest rate over 30 years. Over the lifetime of that loan, you’d end up paying roughly $651,000 in interest.
But what if you got a flatmate in the early years of your loan who pays $200 per week? That’s $10,400 annually, or $52,000 over five years. If you consistently apply that extra income to your mortgage, you could save around $122,000 in interest and reduce your loan term by approximately three years.
That means your $52,000 of rental income results in $70,000 of savings, thanks to the reduced interest you’re paying on a smaller principal. In other words, getting a flatmate isn’t just about short-term help with repayments—it’s about supercharging your long-term financial position.
And What About Higher Rent?
Let’s run another example. A flatmate pays $300 per week instead of $200. Over five years, that’s $78,000. And while the savings will vary depending on your loan structure and interest rate, the earlier you put that money towards your mortgage, the more interest you save over time.
That rental income also allows you to build equity faster, giving you more flexibility if you want to refinance, buy an investment property, or simply sleep easier at night knowing your loan is under control.
Beyond Mortgage Payments: More Ways Flatmates Save You Money
The financial benefits don’t stop at the mortgage. Flatmates can also help you:
Split utilities: Power, water, internet, and even streaming services can be shared, instantly lowering your monthly bills.
Share groceries and bulk-buy deals: Shopping together can save on non-perishables and everyday items.
Build a financial buffer: That extra income gives you breathing room for emergencies, renovations, or other goals.
Increase borrowing power: Banks may consider your additional income when reviewing your financial profile.
Mortgage Structure Matters
If you're planning to use flatmate income to pay off your mortgage faster, it’s essential to check your home loan structure. Some loans penalise you for paying more than the scheduled amount or making lump sum repayments. Talk to your lender or mortgage adviser to explore flexible repayment options.
More income also means:
Better debt-to-income ratios
Increased chances of approval for refinancing
Potential leverage for negotiating a better interest rate
Don’t Forget the Tax and Legal Side
Income from flatmates or boarders may have tax implications. You might need to declare it and pay tax on it, depending on how much you earn. Set up a dedicated bank account for rental income and set aside a portion for potential tax obligations. When in doubt, talk to an accountant.
Also, understand your responsibilities. If your flatmate damages something, you could be liable for repairs or disputes unless you’ve put clear agreements in place.
Flatmates and Home Loan Pre-Approvals
Planning to have a flatmate can also help when applying for a mortgage. Lenders may consider part of that expected income when calculating your serviceability. However, they usually only count a portion—often 65–80%—to account for potential vacancy periods.
But be prepared: banks may want evidence that the income is real and consistent. If you already have a flatmate, keep a record of payments and tenancy agreements.
Pros of Having a Flatmate
Save thousands: A flatmate’s rent, when channelled into your mortgage, can make a significant dent.
Reduce financial stress: Shared living means shared expenses.
Build equity faster: More payments = less interest = more equity.
Potential for better loan terms: More income could improve your borrowing power.
And the Cons?
Privacy concerns: You lose the luxury of having the house to yourself.
Lifestyle clashes: Differing habits, cleanliness, noise levels, or routines can create tension.
Wear and tear: More people means more use of the house—and more maintenance.
Tax obligations: Rental income might be taxable, depending on how it’s structured.
How to Make It Work
Living with a flatmate can be enjoyable and financially rewarding, but it helps to be organised from the outset. Here’s how to set the stage for a smooth shared living arrangement:
1. Choose the Right Person
Look for compatibility in lifestyle, communication, and financial stability. Check references and trust your gut.
2. Set Boundaries Early
Have open conversations about shared spaces, cleanliness, noise levels, and house guests. Clarity now avoids conflict later.
3. Create a Roommate Agreement
Put it in writing. Include:
Rent amount and due date
Utility contributions
House rules
Notice periods
4. Discuss Financial Expectations
Agree on how to handle unexpected costs or shared expenses. Consider creating a small emergency fund for repairs or missed payments.
5. Foster a Positive Environment
A good vibe goes a long way. Respect each other’s space, communicate clearly, and celebrate the occasional win together. It makes the shared living experience more enjoyable—and sustainable.
A Word on Long-Term Strategy
You don’t have to commit to flatmates for the next 30 years. Even a few years of shared living at the beginning of your mortgage can set you up for major long-term gains.
You might also explore rotating boarders, offering short-term accommodation, or hosting international students. These options provide flexibility and sometimes higher income, depending on your lifestyle and location.
Flatmates - Yes or No?
Bringing in a flatmate is more than just about splitting costs—it’s about using your home as a financial tool. When done strategically, it can fast-track your financial goals, reduce your stress, and build long-term wealth.
Of course, it’s not for everyone. But if you’ve got the space and the patience, even a couple of years of shared living could save you tens (if not hundreds) of thousands of dollars. That spare room might just be the most valuable part of your house after all.
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