All Your Options
Regretting not counting your cents way sooner in life? Don’t worry: there’s more than one way to buy a home
SAVE FOR A DEPOSIT
Saving is becoming more and more difficult thanks to increased living costs, but it’s not impossible. ‘I suggest temporarily living [with your parents] for a period of time,’ says Marion Mays, founder of Thalia Stanley Group, a wealth advocacy and investment-mentoring firm. If this isn’t a viable option, Mays suggests taking on a part-time job to boost your cash flow, making your own lunches, carpooling to work, and selling any unwanted clothing or furniture.
TOP TIP If you’re a first-time home buyer, you may qualify for a 0% deposit. Try Ooba.co.za to find out whether you qualify.
BUY WITH A FRIEND OR A SIBLING
Finances falling short of your dream property? Double your cash flow by joining forces with a sibling or a trusted friend. Nikki, 28, took the plunge with her little sister Isabella, 22. ‘ We realised we’d be much better off pooling our money and buying something together,’ she says. ‘ The best thing about it
is I finally own a house and share the bond with someone I trust.’
Two buyers means two sets of opinions, so before you even start your property search, clarify your expectations with each other. ‘I went to a few show houses and would show Isabella my short list, but there was always something she didn’t like,’ Nikki says. To avoid any disputes later on about who owns what, be sure to draw up a legal agreement. ‘ We decided from the start that it would be a 60- 40 split with the deposit, and I live at the property.’
TOP TIP ‘Make sure you’re aware of the other person’s financial habits, and ensure you’ve got a similar mind-set,’ says Nikki.
GET A FIXER- UPPER
Just because you’re good at putting together flat-pack furniture doesn’t mean the reno life is for you. But if you have a vision, determination and a tight budget, read on.
‘Renovating allows you to be creative and explore new ideas and techniques,’ says renovator Elyse Knowles. ‘And you can bring an old home back to life.’ It could also allow you to buy a cheaper home in a neighbourhood you previously couldn’t afford. But on the flip side, be prepared to get dirty! ‘ The toughest part about renovating is living through the chaos while doing it,’ says Knowles. It’s not a quick process – and if you want to save while doing the project, you have to live there!’ TOP TIP Make budgets a priority, says Knowles. ‘You have to figure out from the start how much you would like to spend, and have a contingency plan in case something goes wrong.’ On average, add 10% of your budgeted amount.
ASK YOUR FAMILY FOR A LOAN
‘When purchasing a home or an investment property, it’s wise to budget for at least a 10% deposit plus enough to cover all associated costs, including lawyers’ fees and pest and building reports,’ says Mays. These costs can add up. For example, according to SARS ( Sars.gov. za), transfer duty on a property that’s valued at more than R750 000 is three percent of the value above R750 000; a house with a buying price of more than R1,25-million is subject to transfer fees of R15 000 plus six percent of the value over R1,25-million.
You can get an estimate of transfer fees at Rawson.co. za/ transfer- cost- calculator.
The reality is, you may need help covering these costs. ‘ When asking parents or grandparents for help, demonstrate that their needs have been factored into the equation,’ says Mays. ‘ Think about how the loan of funds will affect their livelihood – when they will get the money back, whether they’ll be responsible for debts or if they have an interest in the home you’re buying.’
TOP TIP ‘Have all of the facts in writing and engage an expert to explain how a “parental pledge” works,’ says Mays. ‘ This shows you’re committed and have done the groundwork, and that you’ve saved and worked out whether you can afford the repayments.’
CHOOSE AN INVESTMENT PROPERTY
‘ There are a few basics property investors should aim for,’ says Mays. ‘First, get your bond preapproval so you know exactly how much you can borrow. Then, do thorough research and seek out advice from experts. If the numbers don’t stack up, it’s not an investment. Investments are bought based on numbers and logic, not emotions.’ She suggests having a safety-plan fund of 10%.
TOP TIP Yes, we know this is an investment property – but if it is an option, live there for the first year. You may qualify for fees savings or lower interest rates and capital gains tax.