Please note that you are using an outdated version of Internet Explorer which is not compatible with some elements of the site. We strongly urge you to update to a newer version for optimal browsing experience.

Can you afford your first home?

29 Oct 2014

The decision to buy your first home is exciting and exhilarating, but before you set out to start climbing the property ladder, you need to set a realistic budget so that your dream doesn’t turn into a financial nightmare.

Buying your first home should be a joyous occasion. You can ensure this is the case by budgeting appropriately and buying a house you can actually afford.

“It’s important to understand that buying your first home is not just about the mortgage,” says Shaun Rademeyer, CEO of BetterBond Home Loans. “There are also transaction costs to pay, such as transfer duty and bond registration, legal fees, municipal connection deposits, as well as the cost of moving, for example.

Rademeyer says you need to have sufficient cash saved to meet these costs, in addition to the amount you have available to put down a deposit. When you are working out your new monthly budget, you may need to add the premiums for new life and short-term insurance, for example, or a monthly levy if you are living in a gated complex, and higher utility bills.

According to Rademeyer it’s hard for most buyers to work out all these costs, and to avoid nasty surprises, they should consult a reputable mortgage originator before they go house hunting.

He says at BetterBond they make sure prospective buyers are not only pre-qualified for a home loan, but fully informed about the whole financial commitment they will be making.

As a first-time buyer, you need to allow for regular home maintenance and emergencies, so your monthly budget should not be so stretched that you are unable to save and build up a “contingency fund”.

This is important as it prevents first-time buyers from "falling in love" with homes that they really can’t afford and will become a financial burden to them, rather than the source of pleasure and financial security that a home is supposed to be. It is much better to buy a more modest home first time around and avoid the financial stress, he says.

First-time buyers also need to allow for regular home maintenance and emergencies such as a leaky roof or a burst pipe, Rademeyer says, so their monthly budget should not be so stretched that they are unable to save and build up a “contingency fund”.

“And although it may be unpleasant to contemplate while they are enjoying the prospect of becoming homeowners, first-time buyers also need to think about what would happen if they should suddenly lose their job or become ill.”

Most, he says, would not be able to keep up their mortgage repayments for very long in such circumstances, and that might mean that they and their families would lose their home unless they have income protection insurance. “These days, it is really worth putting this type of safety net in place, as well as credit life insurance that will pay off the home loan if the borrower dies, and enable the family to keep their home.”

Print Print
Top Articles
Close to business hubs and offering great value, ‘The Parks’, with homes from R3m, has perennial appeal as one of Joburg’s most sought-after residential areas.

Apart from the economic value, the 2018 Airbnb report notes the importance of empowering a diverse range of people and places. But proposed regulations threaten...

You can still find a coastal holiday property in the Western Cape from around R500k if you know where to look, and now is the time for bargains. Take a peek…


Your browser is out of date!

It looks like you are using an outdated version of Internet Explorer.

If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled.

For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox.

Please contact our Property24 Support Team for further assistance. Tel. +27 (0)861 111 724