From renting to owning: how to make an easy transition
Category General News
Making the leap from renting to owning a home is an exciting milestone, but it can also feel overwhelming. You might be wondering where to start, how to navigate the financial steps, or what to expect in the process. The good news? With the right preparation and guidance, you can turn that dream of homeownership into a smooth and rewarding reality. Whether you're ready to settle down or just want more control over your living space, these tips will help you transition with confidence.
The right time to get those keys
According to the latest PayProp Rental Index, there are positive signs in the rental market for tenants interested in taking the step to homeownership. The share of tenants in arrears has fallen to (17.4%) and disposal income has increased since the previous quarter. It's clear that tenants are managing the pressure on their household finances well and have the potential to look towards buying property. Here are other positive signs for the residential property market:
- Buyer sentiment: The Absa Homeowner Sentiment Index (HSI) for the third quarter of 2024 shows sentiment towards purchasing homes has jumped to 73%.
- Property values: House price inflation rebounded to 4.7% by July 2024.
- Interest rates: The South African Reserve Bank (SARB) cut the repo rate by 25 basis points in September. While it's debatable if it can tempt first-time buyers, there's an opportunity for tenants to save more towards a deposit.
- GNU: The Government of National Unity (GNU) has created a positive uptick in consumer confidence according to Ipsos research.
- Energy security: Consumer confidence is also on the rise thanks to the absence of loadshedding, with Eskom reaching 200 consecutive days without power cuts by October.
- Fuel price relief: October marked the fifth consecutive month of price drops, offering consumers a welcome break.
While there's much to celebrate in the market and a solid foundation for buyers, it's up to each tenant to evaluate their circumstances and see if owning is the right choice.
How to move from renting to owning
There's a definite joy in the flexibility and savings that come with renting, but those looking for long-term stability, wealth creation, and the freedom to personalise their space will enjoy the perks of homeownership. Here are tips to help make a successful switch:
Check your finances early: There are significant upfront costs that come with buying a property like attorney fees, transfer fees, and possibly home loan origination fees. Create a realistic budget to find out how much you can comfortably afford to spend on a monthly home loan payment. You should also start saving towards a downpayment; open up a high-yield savings account to maximise your returns.
Work on your credit score: A healthy credit score can open the door to better home loan rates. Check it early and take steps to improve it if needed - this could save you thousands in interest when making your application. From paying bills on time, reducing credit card debt, to avoiding the temptation of opening up new credit accounts, do your part to show you are credit-worthy.
Get pre-approved for a home loan: Knowing what you can afford simplifies your search. A pre-approval gives you clarity on your budget and shows sellers you're a serious buyer. It will also strengthen your negotiating position when making an offer.
Consider future expenses: Unlike renting, owning means taking care of maintenance and property rates. Your new responsibilities can include fixing that leaky roof, sorting out plumbing issues, or rewiring your home. If you decide to buy in sectional title schemes, complexes, or estates, you will also need to budget for levies, HOA fees, body corporate management fees, and special levies. This can impact the affordability of a property over and above home loan payments, so factor in these costs to ensure you're fully prepared for homeownership.
Start your home search: Defining your needs can help you narrow down your ideal property without wasting time on properties outside your budget and lifestyle. Important criteria include location, size, number of bedrooms and bathrooms, and desired amenities.
Don't skip the home inspection: Even if the house ticks all the boxes, a professional inspection can uncover potential issues. Provided the seller was unaware of the defects, it will rest on your shoulders to fix any problems discovered. So, an inspection can be a small price to pay to save you thousands of rands and your peace of mind.
Work with a professional: An expert real estate agent can guide you through the process, from finding the perfect home to negotiating a great deal - making your transition smoother. An experienced practitioner will also be fully aware of a property's 'hidden costs', including the levies, HOA fees, special levies, and other financial obligations. This can help you, as a prospective buyer, from making a financial misstep and committing to a property beyond your means.
Say goodbye to renting and hello to your own home
With positive market conditions creating the ideal environment for first-time buyers, there's never been a better time to make the leap from renting to owning. At Kellaprince Properties, we've helped countless tenants successfully transition into proud homeowners. Let us guide you every step of the way - your dream home is waiting, and we're ready to help you make it yours.
Author: Kellaprince Properties