Buy young and get on the road to financial freedom

Don’t wait to buy a home until you’re about to get married or start a family – start planning for home ownership as soon as you start earning.
That’s the advice of Harcourts Africa CEO Richard Gray, who says young people should be thinking about buying their own home right from the time they get their first job or start their own business.
“At this stage of life, it is true that one usually has to budget very carefully to cover all your monthly expenses but if you can afford to pay rent you should seriously consider whether you would not be better off paying a monthly home loan instalment – or at least start seriously planning to buy a home of your own as soon as possible.
“This is especially relevant now, when low interest rates mean the home loan repayment on a starter home might well be the same or very little more than your monthly rent, and the banks currently have several special home loan products available for first-time buyers.”
Gray says it is important to realise that each repayment on a home loan represents a contribution towards your own financial security – and independence. “The value keeps increasing over time so owners who sell after a few years can confidently expect to show a healthy return on their investment.
“This means that it does not matter if you can only afford a small home now, or even if you have to let it out because you are pursuing work opportunities in another town or country for a while. The fact is that it is yours, and that you will have something to ‘trade in’ when you need a bigger home.”
He also notes that the longer one stays in one home, the more cost-effective owning becomes when compared to renting. “Rent generally keeps rising with inflation every year while home loan repayments are influenced by interest rates. But even when interest rates rise, a portion of your repayment still goes towards paying off the outstanding capital and acquiring your own asset, instead of paying for someone else’s.”
Home ownership brings other benefits as well, Gray says, such as security, stability, privacy and the freedom to control your own environment.
He does caution, however, that it also implies more responsibilities. “Being your own ‘landlord’ means you are responsible for maintenance, repairs and municipal rates and taxes, and these costs do of course have to be taken into account when you calculate how much you can afford to spend on buying your own home.”

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