A story of the ups and downs that come with one of the biggest purchases of your life.
Being a homeowner is one of the earliest childhood dreams I can remember. You know the type? The one where you look at all the other grown-ups and fantasise about what your adult life would look like. Structural inequality isn’t a concept you’re overly familiar with at this point, so your imagination is truly boundless, and you dream about the Ferrari you’re going to drive, your large corner office and, of course, the mansion you’ll get to drive home to, at the end of a long day of being a boss. All of this, of course, will have happened by the time you turn 25.
Of course, when I turned 25 a few years ago, there was definitely no Ferrari or mansion, and the corner office was more like a shared workspace situation. Still, the more adult dream of purchasing my first home was something I had to give serious thought to. Working in civil society often means low salaries and unpredictable job security, which makes buying a home an even more difficult task, but I knew this when I began working, which is when I started my savings journey. I had always known that ultimately, the goal of my savings was to buy a home, and I was determined to create a habit of saving, even when it was difficult. It started with a debit order of R500, each month, into an interest generating account. In the beginning, it was an immense challenge. My salary could barely get me through the month and there were times where I knew that it would be easier to tap into those savings to help me get by. I was also trying my best to send money home each month, as was expected of me, and as is expected of the majority of young people in this country when we begin our careers. This meant having to learn sacrifice in ways I never knew I was capable of (and a lot of two-minute noodles). It also meant being more rigorous about saving when I could, like putting away the bulk of my performance bonuses and taking up extra work on the side to supplement my savings. Many, many years later, I finally had saved enough for a deposit and had managed to maintain a strong credit record, and although it wasn’t easy for me, I know that my relative privilege made it much easier for me than for most other people.
Then came the real work. First, was figuring out how much I could actually afford. Most banks already give you pre-approval bond amounts and that is really useful to gauge what you can afford. Bear in mind that there are also rates, utilities and sometimes, levies, to pay for, so it is important not to break the bank on the bond repayments alone. It is also wise to consider the average home loan amount for that year. According to Lightstone data, in 2019, it was R900 000. Once this is done, comes the fun part: lists. I have a wonderful relationship with lists, and my home-buying experience taught me that one can never have enough of them. The first list I made was a list of deal-breakers and must-haves. From big things like a garden, to little things like the types of tap fittings, it is important to know exactly what you’re looking for, as well as what you’re willing to compromise on.
At this point, many people opt into taking their lists to estate agents and having them do the work of finding housing options, but I like being in control of things, so Private Property became my most frequently used website. The site was incredibly useful for filtering out what I was looking for, as well as giving me alerts when items I flagged became available. From my own experience watching other people buy property, I was prepared to see multiple houses before I found my home. Again, a list was produced. This time, of things to look for when viewing a house. From looking for cracks in the wall and making sure all the toilets flush, to checking the water pressure in the shower and inspecting how much natural light the rooms get, there are endless things to be sure of before committing to a 20-year debt. At this point, having friends or family who have been through the process close by is a huge asset.
Before I skip to the end of this story, I want to note how important choosing a good financial institution is. Many banks will try to woo you with promises of low interest rates, extra rewards, more credit and even fancy gifts, but you need to choose an institution that you are getting the best deal from. Don’t be afraid to pit banks against each other, make them compete for your business. You’d be surprised at how much more you can get out of that relationship if you make them sweat it out a little. Statistics from Lightstone show that 50% of home loan applications are from first time home buyers and banks like Absa can offer up to 105% bonds for first time buyers. You’re in demand. Use it.
Remember, this costs time and money and small things like phoning around for insurance quotes should be costs that you factor in when budgeting for your purchase. The hidden costs of buying a home are immense. Besides the usual transfer fees (which you won’t pay if your home costs less than a million, thanks Tito), there are the actual costs associated with moving to a new house. Moving companies (or really strong friends that can be paid in food), cleaning, light bulbs, locks, even curtains, can all be costs you don’t realise you’re incurring until the very moment you need it. Set aside some money for those costs. I was advised to set aside at least a year just to view different properties so you can imagine my utter horror when I fell in love with the very first house I viewed – the home I now live in.
I’ll be honest with you, reader, my story is definitely an exceptional one. I don’t know anyone else who bought the first house they viewed, but I am someone who does copious amounts of research before making a decision, I usually only take the first step when I’m already quite sure of what I want, and I trust my instincts implicitly. This made the process relatively simple for me. The most important thing for me, though, was the emotional preparation needed for this transition. It is so easy to get caught up in the admin that it’s difficult to stop, reflect and enjoy what should be an incredibly exciting process. For me, I was reminded of the immense privilege I have in being able to buy a home at a young age (the average age of first-time buyers is 34 years old, over 50% of them being women). In the most unequal country in the world, that matters. It means being hyper-conscious of the fact that you can’t prescribe to people how they should make their financial decisions; you can only share the lessons you’ve learned with them. I hope my lessons help you in your home-buying journey, even if only a little.