Delaying home ownership carries a silent cost for South Africans
If you want to own a home one day, waiting until you can afford your dream house or ‘buyers’ market’ carries a major financial cost.
According to Michael Coulter, Head of Product Economics at Standard Bank Home Services, the earlier you buy, the longer you get to build equity, reduce your bond balance, and benefit from property valuation changes over time.
This makes it easier to buy your dream home down the line, as you have built up the equity necessary to make that purchase.
“We’re not saying buying a home is for everyone at all times – especially if you’re thinking of relocating or anticipating major life changes,” said Coulter.
“But if you’re feeling settled and financially stable, buying early may offer more advantages than you’d expect.”
Renting vs buying
There is a simple mistake many make when comparing the financial decision to buy or rent: directly comparing home loan repayments to monthly rental payments.
“This is a common view, but it doesn’t take into account how those costs change over time or what benefits you’re left with when you decide to move,” said Coulter.
While such a comparison does show which will cost more in the first month, there are many variables that also impact the longer-term affordability discussion significantly.
Firstly, rental payments are typically adjusted regularly – at least once per year – and are influenced by many factors, such as inflation, local demand, and housing supply.
In contrast, bond repayments remain relatively stable unless interest rates move – and even this movement can sometimes be to your benefit.
Beyond this, renting a property is a pure expense – you do not get to own anything with the money you pay.
In contrast, when you are repaying a home loan, you are actively building your personal equity – as the money you are paying into your bond is being paid into an asset that you can resell.
This means you could upgrade to your dream home down the line, using the capital you have paid into your existing home as a deposit and reducing the home loan you take out on the newer home.
Alternatively, you could do the opposite – downgrade to a smaller home and enjoy the difference in the form of a capital injection into other areas of your life.
Lastly, instead of reselling, you can pay off your entire bond and eventually end up with almost no monthly cost to have a home.
“Renting is effectively paying for where you’re staying, whereas buying is actually investing into something that holds value,” said Coulter.
“The longer you own a home, the more value you generate compared to renting – making it important to buy your home as early as is feasible.”
Own your home
Standard Bank is helping first-time buyers explore home ownership through affordability calculators, home loan support, a 50% discount on bond registration fees, and financing of up to 108% for qualifying customers.
“If you’re not sure whether buying a home is the right step for you, starting out with our calculators can give you very real insights into the financial impact,” said Coulter.
“From seeing what you could afford to spend on a home, to working out what the repayments would look like, understanding your options might surprise you. And it gives you the knowledge to make the right decision for your life stage.”
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