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Planning to own a home

by | Sep 29, 2023

For most young people buying a home is a financial priority, but a home is a significant purchase and it’s important to get your finances in order first.

Two of the Absa/City Press Money Makeover contestants are preparing for this big step.

Planning to own a homeMolefi has no short-term debt and plans on getting married in the next few years. His goal is to buy a home for his future wife and himself in 2026.

Molefi will also need to consider the costs of purchasing a home. These include transfer costs paid to the conveyancing attorney, transfer duty (tax) on a property valued at more than R1 million, and bond registration costs.

When Mlibokazi entered the Money Makeover Challenge, her dream was to buy a family home. While this is still a goal, she and her husband have identified that they need to first focus on getting their finances in order before committing to home ownership.

The first step is to pay off their short-term debt and improve their credit scores. Once that has been achieved, the money that was going to settle debt can be used to start saving for a deposit.

What will it cost to run the home?

When making the decision to switch from renting to buying, and when calculating what you can afford, make sure you add in all the other costs that come with home ownership – it is not just about the monthly mortgage payment.

There are more costs to home ownership than there are for someone renting. You will have to pay rates and taxes, utility connection fees, levies, and cover all maintenance costs. These could add up to 30% of your mortgage costs.

You need to add these running costs, as well as electricity and water, to your affordability assessment. Once you start to look for properties, ask the estate agent to provide a statement to illustrate all the monthly costs, so be sure to ask for the rates, utility, and levy bills.

Head over to the Money Makeover website to read more about the considerations that need to be taken into account when you are planning to own a home.

2 Comments

  1. Good afternoon maya and team. Well done on the wonderful job you are doing and continue to do and helping us be better and make better financial decisions for our lives. Thank you.

    My brother has a bond(with his then girlfriend) but they now have parted ways. They agreed to let him keep the bonded house and she remains with the township one(no bond). He asked that he puts me on the deed title with him. (Mind you I have no debt and have a stable job). Is it advisable to help him with allowing him to put me down on his deed or not?
    Your reply would be so appreciated.
    Thank you.

    Reply
    • There is a difference between being a joint owner (both names on the title deed) vs a joint mortgage (you agree to repay). It sounds like your brother wants you to be part of the joint mortgage. It is possible to be a co-signatory on the mortgage but not have a share in the property. So you need to have that discussion with him. Will the house (title deed) only be in his name or also in your name? Does he want you to sign surety so that he qualifies for the mortgage without his girlfriend or do you have to contribute to the mortgage? If you sign any agreement on the mortgage you will be 100% liable for the debt if your brother defaults. This is not to be undertaken lightly and you need to have a proper conversation with your brother and have a separate legal agreement.

      Reply

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Maya Fisher-French author of Money Questions Answered

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