No Time Like The Present To Invest In Property
They say there’s no time like the present, but when the present reality is characterised by the rising cost of living and slow economic growth, it may not seem like the ideal time to undertake any major investments like buying property for the first time.
18/02/2025
But not so
fast, says Adriaan Grové, CEO of MyProperty, who
believes now is the ideal time for first-time
buyers to enter the property market. “The South
African Reserve Bank’s recent decision to lower
interest rates by 25 basis points is welcome
news for both existing homeowners and those
looking to enter the property market. While this
may seem like a small adjustment, even a slight
decrease can have a significant impact on
affordability and long-term financial planning."
His advice to those looking to enter the
property market for the first time is to
approach the process with an open mind, and to
educate yourself about the various aspects of
the process. Grové notes two important
considerations when you’re looking to buy
property.
Crunch the numbers
Affordability is always a key consideration
when it comes to purchasing property that is
financed with a bond. With a lower interest rate
the cost of borrowing money is lower but it’s
still important to ensure you can comfortably
cover the monthly bond payments, while also
taking note of the other costs associated with
property ownership.
A good place to
start is MyProperty Home Loans, a tool that
helps you assess affordability and offers
would-be buyers access to a home loan expert
that assists you in applying for
pre-qualification through a bond originator.
Bond origination is a service that assists
buyers in obtaining a bond at a favourable
interest rate, and they typically work with all
the major banks in the country. “A bond
originator works on the buyer’s half, taking
care of all the paperwork, and negotiating the
best interest rate. Bond originators earn a fee
from the bank for the business they bring in so
the service is free to clients,” Grové,
explains.
The goal should always be to
secure the lowest possible interest rate, as
over time the interest can accumulate to more
than the capital cost of the property. Consider
for example that on a home loan of R2 million, a
0.5% lower lending rate can result in a saving
of R676 per month. More significantly, over a
typical 20-year loan period this can result in
total savings of R162,000.
Other costs
to consider include the bond registration and
transfer costs. While these are once-off costs
they can be quite significant so it pays to be
aware of it upfront. Ongoing costs such as
municipal rates and taxes, and homeowners
association fees and levies, should also be
budgeted for. Similarly, property maintenance,
while a variable cost, is likely to crop up so
making provision for it in your overall property
budget upfront can help to ease the burden.
Grové shares that an online tool like the
Bond Repayments Calculator is useful for working
out the monthly costs. “The tool accounts for
variables like loan terms and deposits so it
also works to sketch out various scenarios for
managing your bond repayments.”
Location, location, location
For many buyers the most exciting part -
naturally - is the actual hunt. And luckily with
a variety of online property portals available,
there are thousands of options literally at your
fingertips.
As South Africa’s first
independently owned property portal, My Property
prides itself on its extensive range of
properties for sale. “It’s about making the
process of finding the right property a
pleasurable one. We’re committed to empowering
buyers with options, information and an
experience that befits the significance of
buying property,” Grové shares.
At the
end of the day, property proves to be a solid
long-investment time and again. And if you’re
buying a property in which to live, it’s about
creating a home, which is always going to be
special.
“Leverage the lower interest
rate and even if it means cutting back on other
expenses for a few months, your future financial
self is likely to thank you for this
investment,” Grové concludes.