Financial fitness
Property pointers
The 2020 Budget Speech was a great relief for consumers as personal tax and VAT were left unchanged, meaning there is no or minimal change to consumers' disposable income.
The increased transfer duty exemption from R900 000 to
R1 million has made it attractive for first-time home buyers to enter the market, as no transfer duty will be charged on property valued below R1 million.
Post-budget commentary from various real estate experts indicate that this increase will boost the stagnant property market and benefit those looking to own a house.
The increase in the transfer duty exemption provides a very positive incentive, not only for first-time home buyers, but all those people purchasing homes as ultimately, they pay less transfer fees compared to last year.
Consumers across the board, including those who want to purchase properties valued at more than R1 million, will realise some saving. For example, a consumer who purchases a house valued at R2.5 million will now save R17 000 in transfer fees.
The estate duty change significantly reduces the financial burden on those looking to enter the market. In addition, favourable lending conditions and an
oversupply of new developments make this a good time to buy property.
Tips for first-time home buyers
• Determine value and location and the house you can afford.
• Save for a down payment, the higher it is the less monthly premium you pay.
• Understand all the upfront costs and save for them to avoid bottlenecks.
• Drive through the neighbourhood in which you want to buy on various days at different times to check out traffic, noise and activity levels.
Advantages and disadvantages of owning a property
Owning a home is an exciting experience as it gives one that sense of achievement and security. Below are the advantages and disadvantages that homeowners need to weigh up before making the commitment.
Advantages:
• There is pride in home ownership – you customise your home according to your own taste.
• Buying a house is a sound financial investment, values generally appreciate.
• No duty needs to be paid for properties below the threshold of R1 million.
• Monthly re-payments are stable as compared to renting.
Disadvantages:
• There are substantial upfront costs such as deposit, transfer duty, transferring attorney costs, moving costs, etc., which can cause stress if you are not financially prepared for this. • If you are not financially stable, buying a house can lead to financial ruin as this monthly financial commitment can be up to 20 years and your house can be repossessed if you fail to honour the premiums.
• It is not just the bond repayments that you will be responsible for. Ongoing costs include electricity, water, municipal rates and taxes, levies (if in a gated community), maintenance gardening, paining, etc. • Selling your house can take between three months to a year depending on the market. There are many costs associated with your dream home. Doing your financial homework and analysis upfront is key to having the peace of mind that you can cope with all the costs and enjoy your new home.