Weekend Argus (Saturday Edition)
Getting a foothold in property
Don’t wait for ‘the one’ before you buy a home for yourself – expert
IF YOU’RE young and working, you don’t have to wait until you’re in a permanent relationship before you buy your first home.
That’s the advice from Shaun Rademeyer, chief executive of mortgage originator BetterLife Home Loans.
“Young people often argue that they are not sure they will stay long in the same area or the same job, and that the flat or house they buy may not suit a future partner.
“But we believe millennials should aim to buy a property as soon as possible.
And the sooner you stop spending your hard- earned money on rent – which generates no return for you and buys you no asset – the better.”
He says young people’s main aim should be to get a foothold in the property ladder, almost irrespective of the state of the market or the economy.
“Home prices keep rising – in fact they have continued to rise even in the super-slow economy of the past two years – and the longer you wait, the more difficult it becomes to afford that first home.”
Rademeyer says the other positive reasons that drive young couples to buy a home should also drive young singles. These include:
The chance to build up equity and gain economic empowerment. As the value of your home rises and your home loan balance declines, you’ll be building wealth, giving you something to borrow against should you need money to start a business, for example, pay for further education, or fund a better retirement.
Owning an asset to sell or to rent, should you want to. This means that even if a change in your circumstances does prompt a move, you will have a way of raising the deposit on a new home close to your new job or more suited to a new family.
"Alternatively, the property can be rented out, giving you income and security while you travel or take a work assignment abroad.
Gaining independence. Having your own home means not having to share your space – or at least being able to call the shots if your roommates or tenants are too noisy or messy for you.
As for the type of property to buy, he says many young buyers prefer an apartment or a townhouse.
“Such units usually require less upkeep than freehold homes, and come with built-in neighbours and often with extra facilities such as a pool, a gym, entertainment areas and even a laundry or a tennis court. Of course they are also usually much less expensive than freehold homes.”
This is important, Rademeyer says, because young people should only buy properties that they can comfortably afford.
“The calculation of how much they can afford to repay on a home loan must be done very carefully, and must take into account any other financial commitments they have as well as the ongoing costs of home ownership, to ensure they will not be financially over-extended.
“Otherwise the property is likely to become a burden rather than a pleasure, and they could even end up in a foreclosure situation that would leave a black mark on their credit records, and make any future loan applications or property purchases very difficult.”
As a result, an excellent first move was to get mortgage pre-approval through a reputable mortgage originator.
This should then be followed by the selection of a qualified, experienced estate agent to help find exactly the right type and size of property.