Whether or not you should buy a home, or keep renting is a very important question. What are the things I should look at to decide whether I am ready to buy a house or keep renting?
We should first establish that renting a house is not necessarily a bad thing. Depending on your situation.
Buying a house can be a really good decision, sometimes it could be a bad one.
Here is what you should keep in mind;
Can I afford it?
– Usually people go to the bank and get pre-approved for a home loan and they run with the amount they have been pre-approved for. It is important to note that; Just because your home loan has been approved, it doesn’t mean that you can afford it.
– According to property 24, you should not spend more than 33% of your salary after tax and deductions towards your monthly bond repayments.
– Draw up a budget stating all our debt and expenses to see how much money you have left. Aapart from how much you have been pre-approved for, decide on how much you can afford. Remember to leave a cushion in your monthly budget between income and total monthly expenses including your bond repayment.
– Be prepared to put out a deposit of between 10 %-20% of the home’s value.
– Use a Financial calculator
There is no flexibility in owning a home
Although renting feels like you are throwing money away and everyone around you says it is best to buy because buying a house is an investment. Is it really? Here are some things to consider
For someone who is very early in their career and has prospects of changing jobs before settling down, renting may be a better option for you right now. It is best to focus on saving as buying a house is a very expensive process.
If you’re in your 20s and sometimes early 30s, what you need in a home is going to change as you get older. Also you can easily move to a different apartment or neighbourhood every time you feel your current place does not best serve you. Owning a house does not come with that flexibility.
So if you move around a lot, if you are not ready to settle, if you are still saving up. Renting is the best option for you right now