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The Real Costs Of Owning A Home

Oct 31, 2023 | Property

Owning a home is a complete dream-come-true for most South Africans. It’s a powerful way of investing in your future, through equity that will grow with you the longer you are in the home. Oh, and you can paint any wall any colour without having to get permission first. 

That said, homeownership isn’t just about giving you and your family a sense of stability and security (and creative freedom). There are also a range of ongoing costs that you need to factor into your responsibilities, such as electricity, water and refuse removal, garden and cleaning services, maintenance, painting and so on. 

The key to making sure that you can afford your home and aren’t placed in a difficult position is to do your financial homework first. To help you, we’ve put together a checklist of costs associated with owning a home. 

Your Bond Repayments 

All homeowners know about this cost, so we’ll get this one out of the way first. Every month, you’ll make a payment to the bank, typically by debit order. This is the largest cost to homeowners and is made monthly until the loan is paid off.  

This is, without sounding too obvious, an important cost to budget for and we urge you to use our Home Affordability Calculator to get an estimate of how much you can afford. 

Rates and Taxes 

When you go through the process of buying your house, you’ll have registered for rates and taxes, as well as your water and electricity services. You’ll even have paid a municipal deposit. But once you own the home, you start paying these costs on a monthly basis. 

Compulsory Insurance  

Some forms of insurance are just strongly recommended, but there are two policies that are obligatory if you take out a loan from the bank to buy your home. These include buildings (or homeowners’ insurance) and life insurance. The reason why these two are compulsory is because the bank requires protection to ensure that the value of their security on your loan for the house remains intact.  

Essentially, you need to get buildings insurance to protect the bank’s asset (AKA your home) from an insured peril, like fire and flood. You are also, as the bond holder, required to get life insurance so that in the event of your death, your policy will settle the outstanding bond amount. This is to ensure that the loan is paid off and your family isn’t lumbered with this debt.  

Keep in mind that while your bond provider can offer you these policies, you’re free to shop around to see where you can get the best offer.  

Suggested Insurance  

This is an example of the type of insurance that you don’t have to get, but it’s highly recommended. We’re talking about home contents insurance, which covers the contents of your home against loss or damage as a result of theft or burglary, and other perils, like fire and flood.  

Just so you know, when you take your insurance policies out with the same insurer you usually benefit from a much cheaper combined premium.   

Maintenance Matters 

Part of owning a home means that you need to look after your property. Sure, there are heaps of tasks that you can do by yourself instead of paying for help… but even then, you’ll need to pay for the tools and bits and bobs in order to do things like, mow the lawn, touch up the paint, clean the pool, and so on.   

Security and Extras 

Home security, home warranties, emergency funds… there are all sorts of additional costs that you may want to explore. Some of these may seem necessary, such as a home security system to protect your property from burglaries. Whichever you decide, you’ll need to make sure you’ve budgeted for this before you commit.  

Feeling Informed? 

Get access to your free property report and remember that AA Inform offers a variety of valuable tools and resources, such as our Home Affordability Calculator, helping you estimate your budget. With the numerous monthly costs associated with homeownership, careful financial planning is crucial to effectively manage your responsibilities.

We hope this advice proves beneficial, and keep in mind that AA Inform provides additional useful tools and resources, including a personal loan calculator, access to multiple car and home insurance quotes through the AA Insurance Supermarket, and more.

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