The decision to keep on renting or to buy a property of your own, is a big one.
Certified financial planner, Paul Roelofse says while it's good to aim for entering the property market, proper planning is important.
And of course, cost is key.
Don't ever underestimate the cost of buying a property. We go into the bank and the bank gives us a loan to the maximum affordability that it works out for us. We come back pretty chuffed about the fact that we can go out and get a property. But I don't think we take into account the actual entry level in terms of costs.— Paul Roelofse, Certified financial planner
Transfer costs for a start, then there's registration and legal fees and all sorts of other little things that creep in. We tend to say we'll cater for that along the way.— Paul Roelofse, Certified financial planner
But Roelofse says this approach is too risky and prospective buyers need to plan before even thinking of buying a property.
You should always have a safe contingency fund, a cash fund which will always cater for your lifestyle expenses for at least up to six months. That should be in place first before you even entertain any form of debt for that matter.— Paul Roelofse, Certified financial planner
He also advises prospective buyers to try and save up money for a deposit and also those extra costs that will no longer be covered by a landlord, like for instance a geyser bursting.
If you can save it comfortably for say a 12-month period you then generate this lovely deposit which you put down on the property, but I think you also affirm for yourself that you can accommodate those other unforeseen expenses.— Paul Roelofse, Certified financial planner
If I can save comfortably for those expenses it means I've tested, I've proven to myself that I can actually afford it and then I can more comfortably go into the project of buying a house a little later down the road.— Paul Roelofse, Certified financial planner
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This article first appeared on 702 : Renting vs buying: Make sure you're ready before investing in your own property