ARE YOU READY TO PURCHASE A HOME?BUYING A HOME IS AN EXCITING INVESTMENT
It goes without saying that buying a home – whether it’s your first home or not – is one of the most exciting purchases you’re ever going to make. But it’s probably also going to be one of the most important investment decisions you make in your life, one that requires a great deal of thought. Buying a home is different to nearly all the other purchases we make – you don’t buy a home every day, and there are things that you need to be aware of when going through the process of purchasing a property.
DECIDE WHAT IT IS YOU’RE LOOKING FOR. THINK ABOUT:
- Your price range – your monthly budget and what you can afford.
- Your ideal neighbourhood. What other areas would you be happy to live in?
- Would you prefer a free-standing house or the additional gated security of a complex?
- Size of house/flat/land.
- The number of bedrooms/bathrooms you require.
- Do you need an outdoor space? (garden, balcony, pool, braai area etc.)
- Parking requirements.
- What facilities do you need to be close to (schools, shops, parks etc.)
- Are you prepared to renovate?
Tips for first-time buyers
- First-time buyers should ensure they know how much funding they qualify for, before they start shopping around, Everitt advises. They should “…not necessarily have received their mortgage bond (because you can’t do that until you’ve made an offer to purchase), but they should go to a mortgage originator … and get them to pre-qualify them and find the right bank. They can motivate that particular client’s case better than they could if they went directly to a bank.”
- Most importantly, buyers shouldn’t overextend themselves. That means not going for the maximum possible bond that they qualify for, because economic conditions could always change for the worse at any given time, leading to finances that they wouldn’t be able to manage. Interest rates will eventually rise again and it is important to allow some leeway for mortgage movement.
- It’s vital to have some kind of financial buffer – be it savings or investments – that can be accessed in the event of emergencies that could cause you to miss your mortgage payments.
- Generally, spending about 30% of your income on a home loan repayment is considered reasonably affordable.
- Critically, secure the lowest interest rate possible. “People tend to accept that their bonds require a monthly payment, which they have no way of influencing. In fact, there are many things that you can do that may alter the amount of interest you end up paying and the term of your repayments,” says Kay Geldenhuys, property finance processing manager at bond originator Ooba. She says many buyers hurry to accept a bond from the bank that offers them the biggest loan, with less regard to the interest rate. Securing a lower interest rate will save you a great deal of money long term.
Advantages of HomeownershipBecoming a homeowner comes with a lot of responsibility, but also a lot of rewards.
It’s a Good Investment
While home prices move in cycles over the short-term, if you stay in your home for a long time, it could increase in value and give you a substantial return on your investment.
You Build Equity
When you subtract the amount you owe on your home loan from the total value of your house, the amount left over is your home equity-the “dollar” value of your home that actually belongs to you.
Enjoy Significant Tax Deductions
Owning a home can reduce the amount you pay in income taxes each year. Your mortgage interest and property tax payments may be deductible from your federal taxes, as well as many state taxes.
Build a Strong Credit History
When you buy a home and consistently make your monthly loan payments on time, it demonstrates to other lenders that you are a good borrower and the risk of you defaulting on a loan is low.
Create the Home You Want
Homeownership offers tremendous freedom to create the living environment that you have always wanted. You can own pets, paint rooms whatever color you like, make changes to floors and carpeting and do all the things that make a house your home.