It is not uncommon for first-time buyers to experience anxiety after signing the offer to purchase and realising that they have now locked themselves into millions of Rands in debt.
As one of the biggest purchases one can ever make, it is entirely normal to experience this form of buyer’s regret. To help ease their minds, there are a few considerations of which first-time buyers should remind themselves whenever they feel these waves of anxiety rush to the surface.
“The first mistake buyers make is to think of the purchase solely in terms of the amount of debt they have taken on. Real estate is an appreciating asset.
“Instead of viewing it as an insurmountable mountain of debt, consider each repayment towards the home loan as an investment towards future wealth,” said regional director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
The second approach first-time buyers can adopt is to plan and budget accordingly so that they know they can always afford to keep up with the repayments.
“One of the biggest concerns for first-time buyers is that they will fall behind on the repayments. The best way to eliminate this concern is to go over the individual’s finances and to create a budget that he/she can stick to so that this never becomes a justifiable concern,” he said.
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That being said, some things are out of buyers control that could affect their ability to make their monthly repayment. For example, interest rates can change every two months when the MPC meets.
“The best way to avoid unnecessary stress around this is to purchase within one’s means and to leave room for a 0.25 per cent increase. Historically, the MPC usually never hikes interest rates by more than 0.25 per cent points at any given meeting. “If there is a series of interest rate hikes, these usually only happen gradually, which gives homeowners the time to plan and adjust their budget as necessary,” Goslett said.
Having a contingency fund could also prove helpful in putting buyers’ minds at ease about their purchase. “Life is unpredictable. Things often break or suddenly need replacing, which can put a financial strain on a household. Buyers might also find themselves temporarily unemployed during the span of their home loan.
“Having roughly around two months’ salary set aside in a tax-free emergency savings fund can lessen the anxiety buyers may feel around keeping up with their repayments,” he said.
After conducting all the necessary planning and reassuring themselves that they can afford their purchase, Goslett suggests putting these thoughts out of their mind and concentrating instead on the excitement of purchasing their first home.
“Once assured that they have made the right decision, buyers should distract themselves from unnecessary worry by focusing on all the benefits of owning their own home.
Contact the newsroom by emailing: Marietta Lombard (Editor) germistoncitynews@caxton.co.za, or (Journalists) Busi Vilakazi busiv@caxton.co.za , and Lebogang Sekgwama lebogangs@caxton.co.za.
