Learn from the home-buying journey of a patient buyer
It was because of my experience with a few select housemates that I vowed I would never share my living space again – unless I got married one day. I am a tidy person, and my home is my sanctuary. In addition, for me food is not about gobbling down bread and peanut butter for sustenance – it’s an experience, and that is what I savour in my space, too.
When I left school, my bursary paid for my stay in a residence on campus. Then, after two years, I moved into a flat with friends. Much as I love them, I swore never again. From then on, I largely rented and stayed on my own.
In fact, I bought a house only in the wake of Covid-19 and the lockdowns. Up until then my lifestyle made owning a home impractical. I was building my career and travelling a lot.
When I had worked back my bursary, I stayed in Kenya for three years. I spent two years back in South Africa and then another two in Nigeria. I wasn’t sure whether I wanted to settle in East or South Africa. To this day I travel up north and back a lot.
But I wasn’t sitting on my money. Apart from other savings, I started to collect art. I know when I start selling those works, I will make some handsome returns too.
When Covid-19 put a temporary stop to my itchy travelling, I decided to invest in a home. It wasn’t an overnight decision, though.
I had started saving towards a mortgage five years before. I had my travelling fund and took out another financial services product for my mortgage savings. That’s not something I will ever regret – my monthly repayment on my bond is only slightly higher than the rental I paid.
I wanted to make sure I could keep my house and afford it, as some of my friends have burnt their fingers. They bought houses very early, in areas that were maybe not the best but affordable. When they wanted to explore life outside of South Africa, they were stuck with unreliable tenants and lots of maintenance.
Searching for the right place was a mission and I got my sister to help. You can look on Instagram, too. You must also follow the property cycle – is it a market for buyers or sellers? You have to contact two or three banks for quotes or use a mortgage company to help you find the best loan at the lowest interest rate. It is also a good plan to talk to your financial adviser to avoid an emotional decision and make sure you can afford it.
You will also need help with what owning a home all entails. Google is your friend. You must budget for the building and contents short-term insurance, and I take out a little extra insurance for my art too. The list of other costs is endless: The registration and other legal costs, the agent commission, and registering your electricity bill with the municipality and paying the deposit.
I am glad that I had waited until I was ready for the responsibility of owning a home. My life had to settle down a little, and I wanted to be financially ready – even when interest rates rise.
A colleague at Momentum Investo did the sums recently – if you start saving R1 000 per month in a linked investment when you are 23, increasing by 10% per year and assuming growth of 10% per year, you can save a tidy sum of R135 000 by the time you turn 30. This can be a 10% deposit on a R1,35 million home. In the end your house will cost you R333 000 less and the linked investment fees will cost you R17 200. That’s a lot of money you’re scoring.
You can equally score a lot if you put something extra into your bond every month – or add a once-off lump sum from say a bonus every so often. Let’s say that you can contribute an additional R1 000 per month to the bond mentioned above. This will reduce the repayment term to just over 16 years compared to the original term of 20 years. You can save another R240 000 in interest on your bond.
For me, my home is my safe haven. I love cooking and hosting my family and friends. Already I need more wall space for my art. At the same time, I didn’t want a place that would overwhelm me – I want to be able to lock up and go when I travel.
In a way I can say buying a home made