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Homeownership responsibilities


Homeownership is a milestone that most consumers aspire to achieve. It is a step towards growing personal wealth and owning an asset that will appreciate in value over time, provided of course that the correct principles are applied during the purchasing process.
Adrian Goslett, Regional Director and Chief Executive Officer of RE/MAX of Southern Africa noted that owning a home can influence the owner’s financial well-being for the rest of their lives.
Several factors need to be considered carefully before the buyer is certain that now is the right time for them to enter the market.
Living arrangement considerations
When purchasing a property, most buyers will be required to pay a deposit, as well as the bond costs and attorney fees, not to mention other costs such as insurance and the general upkeep of the home. Once all these aspects have been considered, it doesn’t make financial sense to purchase a home if the plan is only to stay there for a short term. Ideally a buyer should be planning to either stay in or hold onto their property for a period of at least seven years, but preferably longer. This will give the homeowner time to pay a large portion on the bond and hopefully for the home’s value to appreciate enough for the owner to see a return on their investment when they sell.
Financial considerations
The large majority of the population will be loan-dependant when buying a home. What this means is that their home buying ability will be subject to bond approval with a bank. “A buyer’s bond approval success will be based on their level of affordability, which is affected by their debt to income ratio. It is best for a potential buyer to pay down their debt as much as possible before applying for finance,” Goslett advised.
Saving considerations
Saving is a vital part of homeownership preparation. “Apart from the fact that most buyers require a deposit, there are other costs that they will need to carry during the buying process such as the attorney fees, bond registration costs and moving expenses. It is also a good idea to have an emergency fund saved up for any unexpected problems or repairs that may occur. Owning a home means that there is no longer a landlord that can be called to sort out the issue – the problem is for the owner to fix,” Goslett said. There is a fair amount of maintenance that goes along with owning a property so it’s good to make a financial plan and have a nest-egg to dip into when needs be.
Timing considerations
Due to the impact that buying a home will have on a consumer’s long term financial wellbeing, it is vital that they don’t rush into a decision. According to Goslett, timing is a crucial factor when it comes to homeownership readiness. Ideally a buyer needs to be ready to buy, but should also be able to wait if required. “Buyers need to give themselves enough time to research and find the right property, but don’t want to be in a situation where they have started too early and still have six months left on their lease agreement.”
Expectation considerations
A progressive step towards homeowner readiness is realising that owning a property is not always going to be smooth sailing. The reality of homeownership is that it takes time, effort and a financial commitment.