Why buying beats renting a home
Owning a home is almost always preferable to renting, says Dean Hewitt, co-founder, director and principal of Nu Generation Homes.
Even as the South African economy floundered last year, many people, especially the younger generations, went ahead with their plans to stop renting and buy their own homes. He believes people should continue doing so this year.
Here are some of the reasons why you should embrace home ownership:
- A well-chosen property should rise in value over time. Homes in the Northern Suburbs of Cape Town appreciate over time, so buying your own home in this area is a great investment. On the other hand, renting is effectively just helping someone else to pay off their bond.
- The sooner you buy, the sooner you can start generating savings. Paying an additional amount off on your home loan each month will quickly reduce the amount you owe the bank. This can shorten the overall repayment period and save you thousands of rands in interest, especially if the interest rate is hiked during the term of your home loan.
- You can use your home to earn extra money in the short term. When you own a property, you can rent out a spare room, granny flat or storage space, for example, or get a consent-use permit and use some space to accommodate a home-based business to bring in an additional income. This extra money could contribute significantly towards your child’s education, for example, or to invest in a second property.
- A home will also help you build personal wealth in the longer term. Once your home loan is paid completely, you can enjoy life without having to pay a bond or rent.
- You can customise your property. When you buy a home, you can redecorate, renovate and improve it. For example, you can make additions, change the interior, or install insulation, a solar geyser or rainwater tanks to make your home more energy efficient and eco-friendly without having to get a landlord’s permission. In this way, you can also further increase the value of the property.
- Paying your home loan can boost your credit rating, which may give you the means to borrow more money if you need a loan. Also, if you borrow money to renovate, you could increase the value of your home by more than the amount of your registered loan.
- You have more security, as the property is yours to live in as long as you want. You don’t need to worry that the landlord may hike the rental beyond your budget, or sell the property to new owners who might give you notice to move out.
- Banks are competing more aggressively in the home loan market space and their approval rate of bonds has improved. Interest rates on home loans have also become more competitive, which helps your affordability and buying power.
“If you are going to buy a home, it’s always better to do so sooner rather than later,” says Dean. Nu Generation Homes can assist you in finding a home that meets your requirements and budget
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If you are already a homeowner but would like a property that better suits your needs, for example, with additional space to work from home, a granny flat to rent out, a more secure environment or to downscale, we can help you sell your current home and find a more suitable place. We charge a fixed fee for selling homes, rather than an estate agent’s commission, so you get a good deal to assist you with good financial planning.
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