Buy vs Rent? The Home Loans Story
Home Loans are probably the most sought after loan in the world. Often difficult to get and expensive to pay. But is the extra cost worth it as opposed to renting? Let’s have a look!
How long will you stay in the home?
As pointed out by Fidelity, one of the most important items to consider is how long are you planning to stay in the house? For a house to make money, you would need to have a timeline of 20 years or more. This is due to appreciation, bond costs, and maintenance costs. Over this length of the timeline, there is a benefit to owning rather than buying!
Can you afford it?
Affording a house is expensive! With most banks requiring you to have 3x bond repayment as monthly income. You or you and your partner would need around R30 000 in monthly income to be able to buy an R1 000 000 house. This high level of income has made it out of reach for a lot of South Africans! Even with our low-interest rates at the moment, buying a house is still expensive.
And besides the bond, you have deposits, bond registration fees, and attorney fees to take care of. Now, this can all add up fast!
Following this, you need to consider the maintenance fees to maintain the house. From electrical work to mowing the lawn, and roof leakage all becomes your problem now.
Don’t get me wrong. The thought of owning your own house is exciting! But you need to ensure you don’t make this decision lightly. So think through it and look at all the costs involved.
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