Owning a home is a significant investment – the dream of many! For some, it makes more sense to pay off your own property than to pay rent and help someone else do the same. For others, it’s simply about making their own mark, creating their own space to their own taste

This endeavour isn’t without its difficulties, however.

The reality is that owning a home in South Africa comes with several financial challenges, including affordability, financial management, access to funding, competition, rising interest rates, low real growth in wages, and digging into savings or making purchases on credit.

Let’s unpack several financial tips for South African homeowners, to help you make a more informed decision around the purchase of a home of your own.

Research The Market

Before buying a home, research the area to ensure that it’s a good investment. Consider renting in the area first to see if you like it before committing to a purchase. Look into house prices and property types in the area before viewing properties.

You can easily get a FREE property valuation report to get information about the potential selling price of a property as well as market trends, including recent sales in the neighbourhood.

Factor In Additional Costs

One of the biggest challenges facing homeowners in South Africa is the question of affordability. It can come as a shock to learn that what you pay isn’t just the asking price. There’s also transfer duties and costs (applicable to all property purchases above R1 million), attorney’s fees, initiation fee, bank registration costs, moving costs, and even occupational rent (if you take occupation before the transfer of the property into your name has been registered).

It’s important to know how much you can afford before you start looking, so why not use our simple Home Affordability Calculator to get an estimate?

Consider Home Security

Home security is a key feature for home buyers in South Africa. Advancing technology provides powerful ways of securing your home against invaders. Consider investing in security features such as alarms, security cameras, and electric fences. Not only will this protect your biggest financial investment, but it can also result in discounts on your home insurance as many insurers in South Africa look favourably on these risk-reducing actions.

Avoid Selling Amid Rising Interest Rates

As a homeowner in South Africa, the recent rise in interest rates may have you feeling concerned about your financial future. To avoid selling your property, consider refinancing your home loan to a lower interest rate or extending the loan term to reduce your monthly repayments.

There are several factors to consider when reviewing this option, so make sure you understand all the ramifications before you look at this as a viable solution.

Create A Budget

Simple as it sounds, you’d be surprised at just how many people don’t create a budget to manage their finances. But the reality is that creating a budget that includes all your expenses, such as bond payments, insurance, rates and taxes, utilities, groceries, and entertainment will ensure that you can afford your home.

Build An Emergency Fund

Financially lifesaving advice to homeowners is to build an emergency fund. This can help you cover unexpected expenses, such as home repairs or medical bills, without dipping into your savings or taking on high-interest debt.

Feeling Informed?

Owning a home in South Africa requires careful financial planning and management. By researching before buying, factoring in additional costs, considering home security, avoiding selling amid rising interest rates, creating a budget, building an emergency fund, and considering renting out a room, you can manage your finances and ensure that you can afford your home over time.

We trust that this advice is helpful, and don’t forget that AA Inform is home to a range of useful tools and resources – including a personal loan calculator, access to multiple car and home insurance quotes from the AA Insurance Supermarket, and much more.