To rent or not to rent

The property market has been labelled a buyer's market for most of 2020. Even though this year has proven to be disastrous in many respects, many factors have been beneficial for property buyers. From the historically low interest rates and the adjustment of the property transfer threshold, to lowered property prices, the market opened its doors to buyers (at least figuratively speaking for most of the year due to lockdown regulations).

But the simple truth is that buying property isn't necessarily the right choice for everyone, even when they can afford it. Finding out which is best for you is the key.

Renting property

The most obvious reason for choosing to continue renting property is finances. Buying a home requires access to funds in order to qualify for a home loan, and a commitment to a continued expense over many years, as you pay off your home loan. Choosing to rent will also allow you to lower your debt-to-income ratio which will ensure that you have more lending options open to you in the future.

However, once you can afford to buy a house, it may still not be the most beneficial option for you. The questions you need to ask yourself once you have the finances to back a property purchase become vastly more introspective. When the question is no longer "Can you?", but rather "Should you?", you are required to consider how buying a house will affect you... for the rest of your life. Not a simple task, we know. So, start with two simple questions.

The first question is: "Am I ready to take full responsibility for the property (including all the maintenance expenses)?" Homeowners do not have the luxury of calling a landlord when something breaks or leaks or blows away in a gust of wind. Owning a property is a full-time investment that will require you to care for your home consistently, throughout the year, and not just when something goes wrong.

The second question is: "Am I ready to settle down in one place for the foreseeable future?" If you are still adventurous at heart and unsure of where you want your life to go, buying a house may inhibit your options and make you regret one of the biggest decisions of your life. This may introduce buyer's remorse into your life at a time when our economy really does not allow such an unaffordable luxury. Renting a home may be a safer option when you are still looking for adventure, allowing you to alter the course of your life reasonably easily.

Ownership

The biggest benefit of owning your own home is the fact that you are paying for something that will belong to you in the end, not simply paying for the privilege of having a place to stay in, with nothing to show for it in the end. Paying off a home loan means you are ensuring that you won't have to pay for habitation throughout your whole life, meaning rental expenses will someday cease to be a part of your monthly expenses. This, in turn, will allow you the opportunity to save money and increase your wealth in the future.

Once you begin thinking about buying a property, it is also important to remember the aforementioned fact: The real estate market is currently swinging in your favour. Property prices can be unpredictable, and you may never again get an opportunity such as this. So, once you know you are ready for the responsibility and know you want to settle down, don't let grass grow under your feet, unless its growing on the lawn that belongs to you. With interest rates at record low level, you may just be surprised by how much home loan you can qualify for. To get an idea of what you qualify for you can contact the wonderful people at www.mymortgage.co.za.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE).