While buying a home can be a life changing event, it is also the start of a significant long-term financial commitment. For most people, their home is their biggest investment. Their approach to home ownership is therefore critical to their long-term financial management and fitness which includes sound budget planning and good lifestyle balance.
DECO asked Tim Akinnusi, Head of Sales and Client Management at Nedbank Home Loans, for his advice.
‘The first important aspect to consider is saving up for your home loan deposit as this will help in managing your monthly home loan repayments reasonably well, also keeping in mind the eventualities of an interest rate hike. Notably, should the reverse be the case where there’s an interest rate decline like we have seen in the past two years, you might be tempted to lower your repayments – tempting and logical as it may be, it is advisable to but keep your repayments consistent.”
While some people may find budget planning a bit tedious, research has shown that many people enjoy working with tools that are easy to use in their planning such as MyFinancialLife™, an online personal financial management tool that makes it easy for clients to manage their finances and achieve their financial goals. In essence this tool assists clients to save and track how well they are doing against these goals. It also analyses spending habits, showing clients where they may be wasting money. Better yet, it also caters for households so they can manage their finances and save as a family as all their accounts can be linked onto the same dashboard, for everyone to track the progress against specific goals.
Key things to consider before buying a home:
- First thing, understand what you can afford.
- Understand the future value of the home – not just the current value of the home. The location of the home will determine the future value of the home. Homes located in areas with day to day amenities such as shopping malls, good roads, schools, or hospitals will increase the future value of the home, and homes located in remote areas with no amenities in close proximity may depreciate in value.
- Have some money saved up for a deposit if possible as this will help cover other costs associated with buying a house.
- Also consider your ability to repay the house over an extended period of time, assess your current and future affordability.
- Talk directly with your bank. Most clients want to first talk to mortgage originators; however it is advisable to talk directly with the bank to determine your affordability.
- In addition to the location, financing and cost associated with owning a home; one must choose the right banking partner who will walk the journey with you from start to finish.
- Furthermore, given that the average repayment period on a home loan is between 20 and 30 years, it is likely that changing economic circumstances such as rising interest rates, fuel price hikes, electricity tariffs, food and common goods could affect your affordability status at some point – therefore always allow for these fluctuations.
For more property investment advice and creative decor and budgeting tips, tune into SABC 3’s exciting new show WIN A HOME on Thursdays at 8 pm.
WIN A HOME is the only show which gives viewers the chance of winning the biggest-ever home prize in the history of South African television – a luxury, designer multimillion rand two-bedroom, two-bathroom penthouse apartment in the country’s premier lifestyle estate, Steyn City.