The reality of being a top 1% earner with a mortgage in NZ
From Aaron’s YouTube: “Want to be in the top 1%.? #newzealand #firsthome #kiwisaver ##nzfirsthome #nzmortgage #homeloan”
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Posted 13 April 2025
The short version
- Earning over $270,000 puts you in New Zealand's top 1% of income earners.
- A large portion of a high income goes towards mortgage payments and taxes in NZ's main centres.
- Being a sole income earner with a mortgage leaves little disposable income, even on a six-figure salary.
- The current tax brackets may not adequately reflect the financial pressures on high-income homeowners.
The surprising threshold for NZ's top earners
You might expect New Zealand's top 1% of earners to be bringing in millions, but the actual threshold is $270,000. Aaron shares his surprise at this figure, noting that when you factor in mortgage payments and taxes, this income level doesn't stretch as far as you'd think in our main centres.
What seems like a significant salary quickly gets eaten up by housing costs, especially if you're the sole income earner in your household. This reality highlights how expensive home ownership has become across New Zealand's urban areas.
Where the money really goes
When you break down a $270,000 income, you'll find it disappears quickly. Taxes take a substantial portion immediately, leaving you with less than you might expect. Then comes the mortgage - recent home buyers in our main centres will find much of their remaining income going straight to the bank.
Aaron points out that this leaves high earners with surprisingly little disposable income. The situation is particularly tough for single-income families, where one salary has to cover all housing costs without the benefit of a second income.
Rethinking tax brackets and housing affordability
This surprising income threshold raises questions about whether our tax system adequately accounts for housing costs. If $270,000 represents the top 1%, but that income still feels stretched with a mortgage, Aaron suggests our tax brackets might need reevaluating.
The conversation highlights how housing affordability issues affect even those we consider high earners. It's not just about getting into your first home - maintaining home ownership across life stages presents its own financial challenges in New Zealand's current market.
This is general information, not personalised financial advice. For advice on your situation, talk to Aaron.
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