Renting to Owning: Tips for first-time homebuyers

If you have been thinking of buying your own home, then now might be just the right time to do so.

The recent interest rate cuts have brought down the cost of home loans making homeownership a little more accessible for first-time home buyers. Given that prices have remained fairly flat over the last two years, now might just be a great time to take the leap to homeownership.

The benefits of putting your money into your own home cannot be overstated. He says while it is a big financial commitment which should not be taken lightly, it is one of the best things you can do for stability, building wealth, and securing the roof over your head.

We are in a favourable cycle for the interest rate to come down further during the first half of this year. You, however, do not want to wait for more rate cuts as a sudden increase in buyers could make it more competitive, and you could end up paying higher prices.

Prospective buyers should use the opportunities available to negotiate a better price if they can. Do this by going through a pre-approval process for a home loan so that you can put in your offer with confidence. Co-buying could be a solution if you are unable to afford the property on your own. You should also ensure you are able to fund the transaction costs, or that you are able to include that in your home loan if that is available.

Be advised that you buy sensibly. Instead of overcommitting yourself, you can rather start small and grow with your needs. Buy an apartment if that is all you can afford. You can always upgrade later as your financial position improves. Or you could buy a smaller or an older house that you can upgrade and extend as your needs grow.

Property is a long-term investment. It takes at least five to seven years before you will start making a real dent in the capital borrowed. Invest as much spare cash into your property and aim to pay it off as fast as you can. Your home is an asset, and you should treat it as such by taking care of it to preserve and potentially grow the value.

Know what you are in for compared to a rental, owning your own home does come with additional expenses. Aside from the monthly home loan repayments and utility and upkeep costs, a homeowner is also responsible for paying property taxes, something which tenants usually don't carry.

You may also have to budget for levies. If you buy in a complex or estate, there will be additional levies for the upkeep of the common property, and security. Ensure you get a list of the additional costs beforehand so that you are financially prepared. You should also be provided with the rules and other conditions pertaining to living in the complex or estate.

If the property is older, you may need to budget for more maintenance. With an older property especially, you may find maintenance issues popping up from time to time, or aspects which need upgrading. While the structure and certain fixtures such as a geyser may be covered by homeowners' insurance, you will need to budget for emergency repairs, as well as anything not covered by the insurance.

Keep your property maintained to retain its value. Building structures and fixtures deteriorate over time. Do regular maintenance like fixing leaky taps, broken hinges, handles, tiles and lights, cleaning gutters and so on to preserve your investment. This will be especially important if you decide to sell for whatever reason.

Be frugal with renovations and upgrades. Stay clear of fads and trends as these come and go. Since taste and preferences are unique to individuals, it is always advisable to stick with neutral upgrades which add value.

Keep your insurances up to date, both the homeowners' insurance and well as insuring the content. Make sure the property is properly secured and regularly test the security features.

Owing your own home provides a foundation upon which to build a life, raise a family, and build wealth. There are now short-terms gains in property, plan properly, do your due diligence and ensure you know what you are in for. Invest in your property to ensure it not only retains but grows in value.

The idea of homeownership is the holy grail of adulthood and evidence of success is ingrained in us for generations and property still remains one of the best long-term investments, so many people are in a quandary about whether to delay the purchase or bite the bullet and get a foot on the property ladder no matter the consequences

But it's not a simple choice as each option offers distinct benefits and drawbacks and with the economic fluctuations, high interest rates and uncertainties that we're seeing, it's essential to carefully assess one's current financial situation and long-term goals before committing to either option.

Advantages of Ownership:

Building Equity:

One of the most significant advantages of homeownership is building equity. As you make mortgage payments, you are gradually increasing your ownership stake in the property. Over time, this equity can serve as a valuable asset and a potential source of wealth.

Stability and Freedom:

Owning a home provides stability and the freedom to personalize and modify the property to suit your preferences. You have more control over your living space and can make long-term plans without concerns about lease expirations or rent hikes.

Tax Benefits: Homeownership can come with tax advantages, such as deducting mortgage interest and property taxes from your taxable income. These benefits can help reduce your overall tax liability.

Extract from property 24