PROPERTY NEWS - There’s a right time for everything, they say, and there are certain times in life when it is more beneficial to rent a home than to buy one, according to Wayne Albutt, the Rawson Property Group’s Western Cape regional sales manager.
If you’re young and currently renting a home but thinking of buying, for example, there are a few things you ought to consider carefully before you go ahead and change your status from tenant to homeowner.
The first of these is whether you think you are ready to stay put for several years – or might still want to relocate for work or other reasons. Buying a home involves many expenses other than the purchase price and if you have to resell too soon, the value of the property may not have the time to grow sufficiently for you to recoup these expenses.
So if you move frequently for work or like to travel a lot, you would probably be better off continuing to rent for now.
Secondly, you need to assess whether you are financially ready to buy a home. “It is not easy to get a home loan these days unless you have a substantial deposit saved, plus enough cash to cover transaction costs such as transfer duty, legal fees and bond registration charges. Also consider the fact that very few homes will suite your needs and lifestyle perfectly which means that some initial alterations and customisation will be required - this could include things like; security systems, curtains and blinds, additional furniture, painting, gardening and home maintenance tools, extra appliances, etc. which all add up.
“In addition, lenders will want to see that you would have sufficient income left every month to cover the home loan repayment (commonly known as disposable income) - after you have covered any other current debt repayments, your regular living expenses and allowed some leeway for interest rate increases and emergencies.”
What is more, Albutt notes, they will want to see a credit record that reflects a history of paying your debts on time and in full. “So before you start even looking at homes for sale, you may need to spend some time making sure that you have a decent and sound credit history - everyone can check this themselves free of charge once a year via the Internet."
Other times in life that it might be beneficial to rent a home, are when you have just relocated to a new town or country and need some time to find out more about various areas, and when you have just sold your family home and are not sure where you want to settle in retirement. A prudent home owner buys into a suburb firstly before identifying the best property.
At most other times, however, you would be better off buying a home if you can possibly afford to do so, bearing in mind the following often-stated benefits of home ownership:
• You can customise and alter the property to suit your own every changing needs and tastes according to your lifestyle.
• You will be paying for an asset that is appreciating and at the same time building up equity that you can access if you need money for education, emergencies or further investments; and
• You can borrow most of the money needed to acquire a home and keep the profit on the whole purchase price when you decide to sell.
Home ownership is a financially sound investment and makes both financial and lifestyle sense, but renting a property is a wise decision regardless of the financial cost when you either cannot afford to own a home or in the event that flexibility is required.
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