Guiding consumers since 2009

Buy a house from the get go?

By Staff Writer

Experts reckon that buying a home as soon as you start your first job is a better decision than waiting to buy until you are married or starting a family.

Harcourts Africa CEO Richard Gray says that young people should think about purchasing their own home as soon as they can, preferably right when they've started their first job or started their own business.

"At this stage of life, it is true that you usually have 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," he said.

"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 added that it's important to keep in mind that every repayment is a contribution to 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."

It does not matter whether you can simply afford a small home, even if you have to rent it out while you are chasing your career goals in another town, country or even suburb.

"The fact is that it is yours, and that you will have something to 'trade in' when you need a bigger home."

Gray also notes that the longer one stays in one's home, the more cost-effective owning becomes compared to renting.

"Rent generally keeps rising with inflation every year, while home loan repayments are influenced by interest rates."

Even when interest rates rise, some of your repayment will still go towards the outstanding capital and getting your hands on your own asset, instead of paying for somebody else's.

Home ownership offers security, stability and the privacy and freedom to control your own environment but Gray warned that home ownership also comes with responsibility.

"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," Gray concluded.

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