Interest rates might be low, prompting many people to buy their first homes but young people need to be sure homeownership is right for them, says Gerhard Kotzé, managing director of RealNet.
“For example, if you decide to save up for a 10% or 20% deposit, so that you can keep your bond costs down, you need to think realistically about how long that might take and what other goals might be affected.”
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Alternatively, you might decide to go ahead with a purchase with only a 5% deposit in hand – or even to accept one of the 100% loans currently on offer from the banks for those with good credit records.
However, Kotzé says it is usually better to keep your bond low and use any spare cash you might have to pay it off as fast as possible to build up equity – even if this means buying a smaller or less expensive property.
“If you have children, this might be problematic, especially if they need space for homeschooling in addition to the space you need for a home office. You might find it suits you all better, right now, to rather rent a bigger home where you can all be comfortable.”
In addition, he says, young people need to anticipate the total costs of homeownership and work out if they will be able to afford them without putting a strain.