Imagine you are in your mid-20s, your career blooming and your nights are spent out and about entertaining clients and sharing drinks with colleagues and friends at the best spots in town.
That was my husband and I in late 2013, living a carefree lifestyle in a tiny cottage in a gated community in the suburb of Bryanston. Barely a month after we moved into our newly found heaven we found out we were going to be parents, a joyful moment that was accompanied by a lot of life-changing choices, choices we had unfortunately not planned for.
Where were we going to raise our bundle of joy? What school would they attend? Was our cottage a good space to raise a child? These were just a few of the questions we stewed upon in the months leading up to her imminent arrival. One of the key decisions we had to make was whether we should buy a home or continue renting, what we knew for sure was that our studio style cottage would not be a place to raise our child. After many nights of deliberation, we opted for the former. In opting to buy our first home we failed to look into a few things before we took the big leap; these are the 5 things I wish we would have known before we decided to make the biggest purchase of our life.
1. KNOWING WHAT WE WANT AND WHY?
You must know what you are looking for and why you are looking for it. How does this purchase affect your future plans and goals? Is it an apartment, a flat or a house? Do you want to live in a stand-alone, a gated community or a security complex? How many bedrooms, bathrooms and should it have carpets or tiles? We didn’t take time to go through some of these key questions and ended up with a 3 bedroom duplex, in a crime-infested neighbourhood that was far from work, with dirty carpets and no space for a play area even though those were things we clearly didn’t want in a home. In no time we grew to hate our home and spent most our time complaining about the things we wish it had; the reoccurring roaches and our daughter getting constant ear infections because of the dusty carpets were constant reminders why we should have spent more time jotting down what we wanted and what we didn’t want, 2 years after we bought the property we put it on the market, at a loss.
Make a list of exactly what you are looking for and the reasons why you are looking for those things, this will help in the process of eliminating properties that don’t meet your criteria much easier.
2. COSTS, COSTS, COSTS!
If anyone asked me at the time if we can afford to make such a purchase, I would have answered yes with confidence; ask me today and my answer is ABSOLUTELY NOT. At the time we were paying rentals of about R6000 excluding water and electricity for our mini cottage and we strongly believed that the R7K to R8K we were spending on rentals would be of more value if invested in our own space, a sentiment that was also commonplace in our circle. We strongly believed it was the best decision to make, little did we know. The costs involved in purchasing a new home go far beyond the monthly bond instalment and we didn’t know this at the time, nor did we do the necessary research or seek advice and were in for the shock of our lives. Getting our home loan approved was the first hurdle, which passed by with relative difficulty but the next phase we were completely oblivious to.
These are some of the key things we failed to consider.
- A deposit: Putting down a deposit would have assisted with lowering the payback amount and interest rate. We had not saved up or properly planned for this huge purchase and ended up with a 20-year payback of just over R1.2 million for a house that was valued at R540k when we purchased it.
- Transfer and Bond Fees: These fees were built into the bond, and are astronomical. We also had no choice on who our bond or transfer attorneys would be and ended up with attorneys that we felt were somewhat racist (a story for another day) and were more focused on getting the job done rather than taking us through what everything meant, so we signed ourselves away for the next 20 years.
- Municipal deposits, electricity compliance certificates etc.: This we were never made aware of, we received a bill that was over R5000 that the previous owners owed, a bill we had to settle. To be honest, until today, I still do not have a full understanding of the reasoning behind new owners carrying historical debt and why the estate agents failed to explain this.
- Monthly Costs: Your monthly bond is just the beginning, you need to take into consideration, Levies if you live in a complex, security costs when you live in a stand-alone house, monthly rates, repairs and maintenance. Our bond payback amount was just below R6k but monthly we spent just over R10k including complex levies, utilities and maintenance.
Note: Budget, Budget, Budget is the one thing we should have to spent some time on. Sit down and draw up your current budget and in it include the monthly costs that could be associated with the new home. The estate agents should be able to give you estimates on monthly rates, electricity usage, bond calculations etc. In doing this, you will be able to figure out how much you can afford and plan for it and start saving up for a good deposit to put down.
3. The neighbourhood is EVERYTHING.
The crime in the neighbourhood we ended up buying into was too high, the schools not so great and the commute to work unbearable. It is important to find out all that there is to know about the neighbourhood you are planning on buying in and figure out if this community fits into your daily life and future plans and goals.
Read the local paper, scour the internet for information about the neighbourhood before deciding to buy. It is amazing what information you can find by just reading the local paper. Also set up some time to visit the neighbourhood and drive around to see what amenities are in the community and calculate the distance you would need to travel for work, school etc.
4. Two decades is a very long time
We would have only finished paying off our bond in 2034, we would have been in our mid-40s and probably outgrown the property by then. At this very moment, I cannot imagine myself paying off a debt for 20 years and the thought of living in that house today makes me cringe. Also, the thought of paying more than double the value of the property on a sectional title makes no sense at all. I believe if we had spent time thinking about what our future plans and goals were, and what we would do with this property in 20 years we could have made a different decision. 20 years is a big commitment and this is assuming that in the 20 years you will not encounter financial difficulties, lose your jobs or just outgrow the property. You hope to you will not end up having to foreclosure on your bond because you have lost your job or simply, cannot afford it anymore.
Research and calculate how you can shorten the 20-year term and pay off your bond much faster at a favourable interest rate. Seek advice from people who have experience and know more about bonds and how interests rates are calculated.
5. There is no such thing as a PERFECT home.
In less than a year we hated so much of our home we were already planning our next move. The stairs made it difficult for our daughter to learn how to walk, the paint was peeling off the walls, there was no shower, the neighbours were too close, the list was endless. We slowly discovered all the things we didn’t want in this home but also learnt that there is no perfect home, its what you make of a home that makes it perfect. Maybe a change in the paint of the walls, some new carpets or even renovating the kitchen would have made us stay longer, in the end though, we could not make it our perfect home.
4 years later we are budding agriculture entrepreneurs living on a smallholding with a 5km gravel dust road, mountain views and are homeschooling our daughter, a far cry from our duplex city lifestyle but EVERYTHING we want and need.
If you are fussy about colours, features and design, maybe the option is to build your own home or buy into new developments with design features that appeal to you. The advantage to these is options is no transfer fees and the scent of a brand new home, priceless really, Goodluck.