Think you are ready to purchase your first home? Here are a few points to ponder before you take the leap.
Buying a home is a defining and exciting moment for anyone and although it may seem overwhelming, it is certainly worth the experience.
Owning a property requires desire, sustainability and a long term financial commitment, which is why Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, stresses the importance of knowing when you’re ready for home ownership.
“Apart from finding the perfect home and dealing with the often complex process of a property sales transaction, there are a few other aspects that first-time homebuyers need to contend with, such as learning to become a responsible homeowner. Browsing through properties online or visiting a show house or two doesn’t necessarily mean that a person is ready for what being a homeowner entails” says Goslett.
There are many key factors that need to be weighed out from a financial perspective and an emotional standpoint before signing up for the keys to your ideal home.
Goslett shares a few guidelines to consider before making your final decision:
Are you planning on staying in one place for some time?
The decision to purchase often comes with a few financial requirements, such as a deposit, bond costs, attorney fees, insurance premiums and maintenance costs, which is why it is better to invest in a home you plan to keep for a long time.
According to Goslett, a homeowner will reap the benefits of financial return on property investments between five to seven years later, which is why it is beneficial to choose a home you would like to keep for a while.
“Property should ideally be seen as a long-term investment, so a buyer should consider their future plans and where they see themselves over the next five to possibly ten years. These plans will depend on the buyer’s family circumstances and their employment situation. If the buyer is ready and able to settle in one place for a reasonably lengthy time frame, they may be ready to purchase a property,” says Goslett.
Are your finances in order?
Not all homebuyers are able to purchase a property in cash. In most instances a home loan is required from a financial institution to buy a home.
Attaining a loan is very much dependent on the level of affordability for any potential buyer. “Before applying for a bond, buyers need to focus on minimizing their expenses to create as much expendable income as possible. It is also not advisable to take on any other big ticket debt, such as a new car repayment. This will have a negative impact on the buyer’s ability to obtain the finance,” says Goslett.
Obtaining pre-approval through a bond originator such as BetterLife is an insightful way to measure how financially ready you are. This will give you the chance to plan and assess the requirements needed to take that exciting step in securing your first home.
Is the saving in place?
Homeowner readiness and saving can sometimes be seen as inseparable. With purchasing a home comes a few expenses to accommodate for such as the down payment to secure your purchase, maintenance costs, a contingency fund and of course, moving expenses.
“Transitioning from a tenant to a homeowner means taking on the full responsibility for the property. If anything in the home requires repairs or maintenance, the buck stops with the owner. For this reason, it is a good idea to be financially prepared by having a contingency fund in place to be able to deal with any repairs as and when required,” says Goslett.
Is the timing right?
Timing is key in knowing if you are ready to purchase a home. Being ready to buy but also being able to wait if required is important so that decisions aren’t made in a haste. If a buyer is currently renting, they don’t want to be stuck with another six months on their lease and lose out on their right home, but they also don’t want rush with only a month to find a home.
“Buying a home is a big decision - it is never good to rush into it without giving it the necessary consideration. That said, it is also not ideal to hold back too long and let an opportunity pass by because of not being prepared,” advises Goslett.
Buying your first home is a delightful experience but it won’t always be easy. Understanding the commitment, effort, time and of course money needed, is the first step to being ready. “However,” says Goslett, “even though there are likely to be a few challenges that homeowners face along the way, the end result is a home that they can call their own,” he concludes.
Property should ideally be seen as a long-term investment, so a buyer should consider their future plans and where they see themselves over the next five to possibly ten years