Adjusting to the responsibilities of homeownership
15 September 2020 | Life Style
And now suddenly reality has hit…
The truth is new homeowners are likely to go through a period of adjustment as they familiarise themselves with the responsibilities of homeownership, says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
The first responsibility that new homeowners will need to get used to is that the ongoing maintenance costs that used to be at the landlord’s expense, will now be you responsibility.
“Many new homeowners fail to plan for emergency expenses that crop up with property ownership, which makes it difficult for them to afford the repair work when things break unexpectedly. To avoid this, homeowners should have a readily available savings account that they can access in case the geyser bursts or the roof starts leaking, and this needs to be seen to this immediately,” Goslett recommends.
Similarly, new homeowners will need to pay attention to interest rate announcements as these will have a direct impact on the interest charged on their home loan.
“New homeowners will need to listen out for these announcements so that they can plan for the new instalment on their home loan should the prime lending rate change. Especially now that interest rates are at an all-time low, I would recommend purchasing well within your budget to leave room for future interest rate increases,” Goslett advises.
Those who are used to having the flexibility of being able to relocate after living out a couple months’ notice will also need to get used to the financial responsibility of being locked into a home loan for the next twenty to thirty years.
“The financial consequences of defaulting on your home loan repayments can be way more severe than if you skip a month of rent. Especially during these uncertain times, homeowners need to be prepared for this responsibility before they make a purchase they will later come to regret,” he cautions.
Beyond these new responsibilities, Goslett reminds first-time buyers that homeownership also comes with a host of new perks. “As a tenant, the possibility of annual rent escalations loomed ominously above your head. Now, as a homeowner, the reality of annual house price growth is a nice incentive to keep up with the repayments on your home loan. Unlike rent, each monthly instalment on the home loan is a further investment into your future wealth. If you have planned correctly for the responsibilities of homeownership, it will be an easy transition for you to make and you will soon start revelling in the benefits of homeownership,” Goslett concludes.