Nov
Articles, Money-Wise
Property: rent or buy?
With interest rates climbing, anyone paying off a bond is feeling the pinch! In 2020 when interest rates dropped dramatically, it made sense for some people to buy instead of rent.
But with interest rates climbing again, have the tables turned?
Owning property has often been considered to be the cornerstone of wealth, and it’s wise to have a home that’s paid off by the time you retire.
But there are pros and cons to both renting as well as buying:
Renting
A big positive is that you pay the same amount for the length of your lease so you can budget carefully. And the landlord is responsible for maintenance so there’s no nasty surprise.
It may also be cheaper to rent the type of property that you need instead of buying. As an example, finding a three bedroom house with a garage may not be affordable to buy, but you may be able to rent one within your budget.
On the down side, you are paying off someone else’s bond, adding to their wealth.
You also can’t make major changes or fix the place up to suit your taste and you run the risk of the landlord selling the property, forcing you to move. There’s very little security when you rent.
Buying
You’re are paying off on an asset which you will eventually own, and as it grows in value, you can sell it for a profit one day. You can make improvements to the property and home ownership gives your family a sense of stability and security.
Also, if interest rates drop, your repayments will decrease.
On the down side, you are subject to interest rate fluctuations and increases in rates and levies. Maintenance can be costly but will add value to your property.
Whether to rent or buy is a very personal decision, and buying property isn’t cheap.
There are transfer, bond registration and other costs that need to be paid, apart from the actual home loan.
To get an idea of the numbers, look at https://www.ooba.co.za/home-loan/calculators/
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A word about FLISP
As a first time buyer, you can get a subsidy of between R30,001 and R130,505 through the Finance Linked Individual Subsidy Programme (FLISP).
This can be used as a deposit, to cover transfer and bond registration costs or even paid into the home loan.
To qualify, you have to be a South African citizen or permanent resident, over the age of 18 and earn between R3,501 and R22,000 per month.
You also must not have previously owned property or benefitted from a Government Housing Subsidy Scheme.
It’s a great way to help get your foot in the door.
Once you’ve found a property and have an approved bond, contact the National Housing Finance Corporation Society (www.nhfc.co.za) or your local Department of Human Settlements to apply for FLISP.
The best time to buy…
…is now.
Interest rates may go up a little more but you are buying at the most expensive time, so when they start dropping you’ll score.
Some people may be forced to sell now too, as bond repayments become unaffordable. It’s a good time to find a bargain or two out there!
[This article was written by Sylvia Walker, financial planner, speaker and author of smartwoman. Visit www.sylviawalker.co.za to find out more.]
Mums, do you own the home or flat you live in or do you rent?
This is one of the most profound articles l have ever come across. Thank you.
I own a home with a small yard. I would really love to sell and get a home with a bigger yard since I have 2 kids.
I rent an apartment in the quiet side of Johannesburg. I am hoping that 2023 will be my last year of renting as l am planning to purchase a decent home.
Trying to get my own home
An amazing, insightful read. Just the information I needed going forward. I’m currently deciding on renting or buying. The FLISP info is very informative. Thank you
Very very tricky hey but as for my side l think to buy it’s best as you can buy and rest that place out an the money will help you to pay off the bond l don’t know what other’s think .
I plan on buying my own property when the rates are lower. For now I am investing as much as possible to be able to buy a home and I’m paying rent for now
I’m renting but I’m looking for ways to own a place so that I can give my children that sense of stability and security. Thank you
I’m renting but I’m looking for ways to own a
This article is awesome. My family and I are renting a property and God willing one day we will purchase our own home. I do prefer renting for the time being…. We moved into this property in June and we have the most terrible neigbours(crying face) hence we can pack up and relocate. I can’t imagine owning this property and having to live with awful neighbors for the rest of your life. This article is bonus for me and will add to my knowledge.
We stay in a granny flat at the back of my mother in law’s house. We pay her rent every month.
Thanks for the info.Its helpful
I am renting praying that I own property one day it will be best investment for myself and my kids
Thank you the helpful articles