Are you ready?

While home ownership has become the goal for many South African consumers, buying a home too soon without completing the necessary research can leave homeowners with a very expensive noose around their necks, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

He says purchasing and owning property has many benefits while also providing a sense of stability and the freedom to make decisions regarding what happens to that property. Whether the owner wants to renovate or rent the property out, the choice is theirs. “However,” says Goslett, “along with the freedom homeownership brings, there are more responsibilities as well as additional costs that buyers should consider before entering the market.”  

Goslett says that the first step for a buyer to consider when assessing whether they are ready to purchase a home is to see what they can afford. Buyers will need to look at their lifestyle and financial health to determine whether home ownership is right for them at this stage. If a buyer is unable to afford a home that meets their current requirements, then they may have no other choice but to continue renting for a while. It is important for the buyer to take into consideration all costs involved such as maintenance costs and rates and taxes, and not just the bond repayment when looking at their affordability.

According to Goslett there are opportunities available in the current market for buyers to purchase good value-for-money properties, but buyers must make sure that they are in a financial position to be able to afford the home over the long term. Although unforeseen circumstances may occur, purchasing property should be viewed as a long term investment and buyers could end up losing money through re-selling a property within a few years. Generally, due to the cyclical nature of the property market, a minimum period of nine years is required to see the best possible return on investment.

While having a steady income and stable job will be an important part of assessing home buying readiness, it is also important for buyers to have a contingency plan in place should they lose their employment. It is vital for homeowners to have savings available to cushion them and help them to continue making bond repayments for the next two to three months or until they find new employment.

Goslett emphasises that buyers will need to save, save, save. Having as much savings as possible will give the buyer more financial options. “A bigger deposit, for example, can result in a larger home or a lower bond repayment. Financial institutions require a deposit of between 10% and 30% before a loan is granted and there are also legal fees, transfer duties and homeowner insurance that will need to be covered,” he says. Speaking to a property industry professional or a mortgage originator will give the buyer an indication of what costs will be incurred during the purchasing process.

He says that where possible, potential buyers should deal with any debt that they may have before purchasing a home. Having more disposable income will be viewed favourably by banks when applying for a bond as well as alleviating some financial pressure on the buyer to meet monthly payments. “If buyers have debt such as credit cards or clothing accounts, it is generally a sign that they are living beyond their means and they may want to determine what they can pay off before deciding to take on a bond and the costs of owning a property,” says Goslett.

Homeownership is not a decision to be taken lightly, says Goslett. “As buying property is a long term commitment, it is vital that the buyer is ready and prepared to make that commitment.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
    • 16 Jan 2018
      The start of the new year is symbolic of new beginnings. A good time to take stock of one’s possessions as well as how necessary they actually are. However, seeing as the process may appear daunting – a plan goes a long way.
    • 16 Jan 2018
      The Western Cape is still in the throes of a severe drought and many households have to adjust the way they use and save water. It is a little more complicated in sectional title schemes, however, as it is not that easy to implement grey water systems for multiple users and it is also difficult to monitor water usage accurately if there are no separate water meters
    • 15 Jan 2018
      In ideal rental situations, when a lease is signed the tenant will stay for the full duration of his lease without any complications and the landlord will uphold his obligations, creating a win-win situation for tenant and landlord.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us