New home? Why you should resist the urge to splurge
Category Buyer Advice
Buying a new home is exhilarating and in all the excitement of moving in, there’s always a big temptation to splurge on new furniture, curtains and appliances to make everything picture-perfect – especially when your inbox and social media pages are suddenly overflowing with attractive special offers that all seem tailor-made just for you and your new home.
However, says Berry Everitt, CEO of the Chas Everitt International property group, it’s very important that you resist spending any extra money at this time, and rather work on rebuilding your savings, or perhaps even paying a little extra off your home loan every month and gaining more equity in your property.
“For most people, and especially first-time buyers, a home purchase is a major undertaking that can leave you financially very stretched. You may have used up all your savings on the deposit and transfer costs, for example, and moving itself always costs more than you think it will.
“Then there is insurance to think about, the municipal re-connection fees for water and electricity services, the cost of moving or installing a new telephone or internet line, new school uniforms perhaps, the admin and sign-on fees for the new school, new gym or new security company…and the list goes on.”
Meanwhile, he says, you also need to make provision for possible future increases in everyday costs such as the petrol price, electricity tariffs, medical aid contributions and school fees, as well as for regular home maintenance and any future interest rate increases – because if you don’t, you run the risk of losing your home because you can no longer afford the monthly repayment.
“Consequently, your primary objective as a new homeowner should be to keep improving your financial position, by quickly paying off any extra debt you may have run up, then rebuilding your emergency savings fund and then diverting any extra income you may have into your home loan account so you won’t be caught out if interest rates rise or if you need to relocate sooner than you thought.”
Writing in the Property Signposts newsletter, Everitt notes that in most cases this will mean that new owners really must put off the purchase of that stunning new coffee table, the new linens that would be perfect for the spare bedroom or the new expresso machine, disappointing as that may be.
“In compensation though, you should shortly have greater peace of mind about your finances – and about the savings in interest that you will generate if you keep paying extra cash into your bond. Over the next few years, these could be worth quite a few coffee tables.”
Issued by Chas Everitt International
For more information contact
Berry Everitt on 011 801 2500
Or visit www.chaseveritt.co.za
Author: Chas Everitt