If you’re looking at homeowning versus renting a house, you might be asking yourself if it’s worthwhile to buy. South Africa is in a state of economic flux and most people battle to make ends meet. Renting seems like a better option for many of us as the month-by-month expenditure might be less - but don’t be put off from buying, as it has big advantages!
Here are a few advantages of buying your home, to help you make up your mind and take that first step to becoming a homeowner.
1. Buying a house is security for your future
Buying a home instead of renting means that you are investing in your future by owning a valuable asset. It’s a fact of South African life that most of us don’t save enough money for when we get older. However, being able to sell your home that you paid off over 20 years, and maybe downsizing to a smaller home on retirement, can give you a welcome sigh of financial relief when you need it the most. If you rent, you won’t get this benefit when you retire.
2. As a homeowner, you can improve your credit profile
If you own your house, the banks tend to smile on you kindly! Not only do you have a substantial investment on your name, but making sure you make your monthly bond repayments on time increases your credit score, so you can open accounts or take out loans with no hassle.
3. Refinancing your home loan can improve your lifestyle
Your house increases in value over time, so if you’re a homeowner for a number of years, it’s probably worth a lot more than when you first bought it. If you decide to refinance your home, you can secure a new mortgage for your property based upon its current market value, and not on the amount it was valued at when you first took out your home loan. This means that you can access equity, which you can use to improve your standard of living, or make a major purchase if you want.
4. You can increase your home’s value if you buy
If you buy your house, you can renovate it in your own time and in the way you want, and boost its resale value. Even relatively small changes can make a big difference. For example, if the house you buy has a gravel or dirt driveway and a carport, you can pave the driveway and build a proper detached garage over time. This would substantially increase the property’s functionality and appearance; and if you manage the renovation project wisely, you can boost your house’s value much higher than the renovations cost you.
5. You can make money by renting your property to other people
If you own your house, you can turn it into a source of income. If you do it smartly, you can pay off your bond partly or completely, or even turn a profit! The easiest way to do this is by renting out part or all of the property – just make sure you follow all your local rental property laws. You might rent out a bedroom to a friend, live in one part of the house and rent out the other part, or even buy and move into second home (for example, if your household income increases substantially from a promotion). This means your entire first property will free to rent out.
6. Home improvement - get creative!
As a homeowner, you don’t have to answer to anyone with your DIY projects, decorating, and home improvement choices, as long as you don’t break local building codes or homeowners’ association rules. You can remodel your kitchen, paint walls, get new bathroom fixtures, or build a braai area or deck to your heart’s content. If you want purple walls and yellow fixtures – who’s going to stop you? You can have all kinds of fun, which you don’t get to do if you rent.
7. Homeowners have a sense of community
Since homeowners tend to stay in the same house for longer than renters, they’re more likely to put down genuine roots in the community. You get to know your neighbours on a deeper level than just saying “hi” a couple of times a week – you can make real friends. Your children go to the same schools and grow up together. You can make your community safer by joining the Neighbourhood Watch or organising security patrols. You can get more involved in school or church activities. People are also more likely to help each other out in times of trouble if they have known each other for years. As a renter, you might not get to do any of those things, because you don’t know if you might have to move again in a year or two.
We all know that taking on a big financial commitment can be nerve-wracking - but as you can see, it’s well worth your while to take the plunge and become a homeowner, instead of making your landlord richer.