MyMoney Online

3 reasons to rent rather than buy a property

The traditional approach to sound financial planning is to buy a property as soon as you can instead of renting. The rationale is that you will be better off paying for your property as soon as you can with the rent you are paying to your landlord.

Listen to Paul chatting to Sam on Weekend Breakfast...

Paul's reasoning is as follows...

Cash fund first

If you are starting a new job, business, or if you are a contractor or freelancer you need to be confident that you can comfortably generate consistent income. Buying a property binds you to a long term financial commitment which you will need to cover over the long term. You should aim to settle down first and get a good fix on your income over a period of time.

You need the peace of mind that you can cover your monthly expenses for at least 6 months. So step one in your planning is to save into a cash account until you can comfortably cover your living expenses for 6 months before even considering buying.

Property binds you

If you buy a property you immediately bind yourself to a location. If you find a new contract on the other side of the city or country for that matter, you will then be burdened with the extra cost of commuting further or relocating, Renting will allow you to consider options of moving closer to where your work takes you.

Cash is king

Whilst you are a tenant the risk and costs associated with owning a property belong to the owner. Whilst renting you are freed up to save as much cash as possible for the eventuality of buying your own home one day when you are well settled in your career have saved a comfortable cash fund.

Currently the property market is pretty flat and there is no compelling reason in the foreseeable future to rush in and buy. Mindful of the fact that interest rates are on the rise, the cost of borrowing will be that much more and your interest on your savings account will be that much better.

Read more from Paul Roelofse on www.investforlife.co.za


This article first appeared on 702 : 3 reasons to rent rather than buy a property


Recommended

by NEWSROOM AI
Read More
How to calculate how much money you need to never have to work again

How to calculate how much money you need to never have to work again

How much is enough? Is there a simple calculation? Warren Ingram, a personal financial advisor at Galileo Capital, explains.

'3 best local and offshore (US-listed) shares to buy in mid-March'

'3 best local and offshore (US-listed) shares to buy in mid-March'

Razeen Dinath, Head at Cadiz Equity, shares his stock picks of the week.

3 risks to your retirement savings (and how to mitigate each of them)

3 risks to your retirement savings (and how to mitigate each of them)

Only 5% of South African retirement fund members will retire comfortably. Bruce Whitfield interviews advisor Warren Ingram.

Why women must be far more careful with their money than men

Why women must be far more careful with their money than men

Ray White talks to personal finance guru Warren Ingram, who reckons women should take financial planning more seriously than men.

13 tips for saving hundreds (nay, thousands!) of rands each month

13 tips for saving hundreds (nay, thousands!) of rands each month

The economy is toast. Personal finance expert Warren Ingram shares 13 highly effective tips for making ends meet.

How to retire while you’re still very young

How to retire while you’re still very young

If you do things differently, it’s possible stop working far earlier than you ever thought possible, says Warren Ingram.

Popular articles
Shift to stage 2: Over 800 megawatts back on line from Cahora Bassa - Eskom

Shift to stage 2: Over 800 megawatts back on line from Cahora Bassa - Eskom

Eskom COO Jan Oberholzer predicts Stage 2 load shedding for Friday and Saturday and energy expert Chris Yelland also weighs in.

Capetonians water consumption down by about 536 million litres of water a day

Capetonians water consumption down by about 536 million litres of water a day

Mayco member for water and waste, Xanthea Limberg talks to Kieno Kammies about Cape Town's latest dam levels.

Kwese TV obtains free-to-air licence in South Africa

Kwese TV obtains free-to-air licence in South Africa

Icasa has approved a TV licence for ​Kwesé Free TV ​to start ​5 ​new channels in South Africa from 2020.

Distraught caller describes harrowing experience on Baden Powell Drive

Distraught caller describes harrowing experience on Baden Powell Drive

A CapeTalk caller explained to Lester Kiewit how he went through flames and over rocks, and debris to escape his car being stoned.

Here's how to check your load shedding schedule in Cape Town

Here's how to check your load shedding schedule in Cape Town

Eskom has warned that more power cuts can be expected as maintenance continues over the next twelve months.