select
|

Is it better to buy a home?

Careen McKinon, Provincial Sales Manager from ooba, South Africa’s largest bond originator, says that the rising interest rate environment is making it difficult for South Africans to afford buying a home. She suggests weighing up the financial implications of buying your own property versus the long term impact of renting.
 
Consider your long term goals
 
Consider whether you see yourself renting or owning your own home within the next five to 10 years. This will help you in putting a plan in place to be able to afford the type of home that you want to live in, should you want to buy. Remember that buying a home may offer you more security in the longer term, as you do not have to answer to a landlords, leasing agents, or similar third parties.
 
“If you are renting and the owner of the home decides to sell, you may be forced to move, which may negatively impact your stability. Living in your own home gives you more freedom than having to answer to third parties,” says McKinon.
 
Does buying offer you a return on investment?
 
Property is likely to accrue value over time so, if you buy, you're in a better position to make a return on this investment.
 
“As an owner, the increasing value of your property affects you positively whereas if you are renting, you are essentially helping someone else pay off their bond,” adds McKinon. 
 
If you rent out your property, you can invest the rental in your bond, but you won’t be able to sublease a property that you are renting from someone else, as most rental agreements prohibit this.
 
Your own home gives you freedom of choice
 
“Often, when you are renting, the owner needs to give you written consent to change anything within the property, such as putting in hooks for pictures or replacing an old rail. The fact that the owner has the final say may feel very limiting to a renter,” says McKinon.
 
By owning your own home, you can make additional income either by building onto the existing property, or renting out a granny flat or something similar.
 
Also, if you are a business owner, you may be able to use your home as a start-up office. You’ll be able to save on business property rental by factoring this into your business plan.
 
No more rental increases
 
Standard rental agreements allow for annual increases of between 5% and 10% per year which could leave you out-of-pocket and potentially looking for a new home as time goes by. When it comes to owning your own property, you won’t be liable for annual rent increases, and you may be able to fix your interest rate during a rising interest rate environment. This will help in keeping costs down.
 
“In addition, owning a home offers you financial security and benefits your credit risk profile. This is especially important when it comes to acquiring finance for things such as a motor vehicle or even a second property,” concludes McKinon. 


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Nov 2017
      Demand for secure estate living in Hout Bay has risen sharply in recent years, precipitating a spike in development with estate homes now accounting for 20.24% of the property landscape with the launch of an exclusive new gated development on 26 November adding 20 more units to the existing 1250 estate homes.
    • 24 Nov 2017
      There are some things that money can’t buy – spectacular views from Mouille Point to the V&A Waterfront and a trendy and lively neighbourhood that encapsulates the very best of the Cape Town lifestyle.
    • 24 Nov 2017
      Tshwane’s four-bedroom Mayoral mansion, nestled among ambassadorial residences in the upmarket suburb of Muckleneuk, fetched R5.1 million after spirited bidding at High Street Auctions’ final sale of the year.
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK