Buyer advice: Top tips for getting off the rental treadmill
Category Buyer Advice
Although rentals have generally not increased very much for the past two years, home prices have also been rising only slowly, with the result that paying the rent is now about the same as paying a monthly bond repayment in many areas.
And this is encouraging many long-term tenants to consider buying their first homes now, especially since the banks are eager to lend and working hard to come up loan products that make it easier for first-time buyers to get into the market.
However, it is very important for first-time buyers not to get so excited that they overlook the importance of doing some research and planning before they take the plunge. Factors to consider include:
*The area to buy in. For the price of an apartment in the city, you might be able to buy a small house in the suburbs, or a larger house in the countryside. But then you need to consider the inconvenience and cost of any commuting you would have to do, and what amenities you want your area to have. If you are planning on starting a family, for example, you might be quite happy to swop an urban lifestyle for a garden and good schools.
*Future needs. It is costly and troublesome to sell and move again too soon after you have bought your first home, so if the size of your household is likely to grow in the next five years as you have children or your ageing parents come to live with you, it might be a good idea, if you can afford it, to buy a somewhat bigger home than you currently need. You can always rent out the additional space until you do need it.
*Maintenance and security. If you buy a home in a sectional title complex or a gated estate, you will have less garden and home maintenance to worry about and this is very attractive to people who work long hours or travel frequently and are away from home a lot. The security provisions also tend to be better in community house schemes. However, this convenience and peace of mind does come at a cost, in the form of a monthly levy. This is payable in addition to your monthly bond repayment and all the other costs of home ownership (such as municipal rates and insurance), and you may find that a freehold, suburban property is more affordable.
*How to buy more home for less money. If you buy a pre-owned home that costs less than R900 000, you will pay no transfer duty. There is also no duty payable when you buy any newly-built home from a developer, because tax is built into the price in the form of VAT. Other ways to save on a home purchase include buying a repossessed or distressed home, or buying a fixer-upper. To access information about repossessed or distressed homes for sale, it is best to consult a reputable real estate company approved by the major banks to sell such properties. It is not advisable for first-time buyers to buy repossessed property on a Sheriff's auction. We also suggest that inexperienced buyers exercise a lot of caution when it comes to homes listed as fixer-uppers, because these can be plagued by hidden defects that make them a lot more expensive to fix than initially anticipated. Before signing an offer for a fixer-upper, it would be advisable to get a professional estimate of what the necessary repairs will cost.
Author: Meg Wilson