Don't overextend yourself when buying a home

Private Property South Africa
Jackie Gray-Parker

It’s an exciting time. You’ve been awarded a bond and have taken ownership of your first home. As you begin to settle in, your thoughts stray to how much nicer it would look with a new set of elegant curtains, new tiles or a luxurious new lounge suite.

As exciting a time as it may be, it’s vital not to over-extend yourself on additional items you think are ‘necessary’ to complement your new home as doing so could ultimately put you at risk of losing your dream home.

Commenting on the matter, Dr Simphiwe Madikizela, head of projects at FNB Housing Finance says:

“While it is very exciting to take ownership of your first house you need to take particular care to budget as a new home comes with lots of new expenses.”

Some of the expenses new home owners have to contend with include water, lights and municipal rates. Although you can control your water and light usage to a degree, municipal taxes, which vary according to the size of your property, are fixed.

Other new costs include levies (if you have bought a sectional title property) and building insurance which is mandatory if you have a bond. Although not obligatory, home contents insurance is another cost most new homeowners inevitably end up adding to their budgets.

Another cost that new homeowners don’t always factor in is maintenance and upkeep which applies to new houses too. It is critical that although seemingly insignificant, even the smallest problem must be attended to as it can quickly develop into a bigger problem and put your property at risk.

Says Madikizela: “First time home owners are not always aware of the additional cost pressures that come with home ownership. One of the most common mistakes we find is that new home owners, in their excitement, acquire unnecessary and dangerous amounts of debt buying furniture on account.”

Although tempting to give in to the need for instant gratification (and bragging rights) it’s important to steer away from such behaviour.

Adds Madikizela: “What you may not realise is that furniture accounts can lock you in for 12 to 24 months before you are able to pay them off. This adds a great amount of unnecessary pressure to your budget and could put you at risk of defaulting on the more important costs such as your bond.”

So, before you go out on a shopping spree and acquire an expensive lounge suite or the latest flat screen TV, think carefully and honestly and define whether or not you ‘need’ something or ‘want’ something. If you think you really need something, look carefully at your costs and see if you can afford it outright. If not, try to avoid miring yourself (and possibly your family) in debt by borrowing items temporarily or asking family members and friends to donate old furniture and appliances.

Notes Madikizela: “There are a number of costs that are unavoidable and it is necessary to budget for them over and above your bond repayments. Take your time buying furniture, hunt for second hand items and the best deals and save for special items that you may want rather than buying them on account. While it is easy to be swept away in the excitement of owning your first home, do your sums and don’t be tempted to load yourself with unnecessary debt.

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