Property: To Buy or Not to Buy?
You may have been brought up to think that owning a home is the ultimate goal and that it is something that every family should do sooner rather than later.
However, as with many other things in life, timing is everything.
Buying a home before you are financially and emotionally ready to do so could leave you house-poor (a situation that describes someone who spends an excessive portion of his or her income on bond repayments, property taxes, maintenance and utilities).
There are many reasons why you should hold off on buying a home.
Here are five reasons NOT to buy property
– Your job might require frequent relocation, for instance, every few years. Conventional wisdom and experience have shown that property is not a short-term investment. For this reason, it is often advisable to continue renting until your job permits you to plant permanent roots.
– Pressure from family and friends. Just because your parents bought their first home in the early 20s does not mean that you have to. Likewise, just because your friends are all investing in the property market does not mean that you are being left out if you do not buy immediately. Circumstances differ from person to person and you should wait until the time to buy is ripe for you.
– Just because you qualify for a bond and the bank is prepared to finance you, does not mean that you are ready to own your own home, particularly if you do not have your debt levels under control. Saving and putting down a sizeable deposit on your first home makes a lot more financial sense than taking 100% bond just because you are able to do so.
– There is a lot more to owning your own home than just paying the bond. The cost and time of maintaining a property need to be taken into account before a purchasing decision is made. You should either have the necessary disposable income to pay someone for maintenance or have the time needed to do the work yourself.
– If you are patient and hold off on a buying decision until your income increases and you have accumulated savings, you will generally be able to buy in a better area, with a better return on investment.
Conversely, there are a number of reasons why you should buy a property earlier rather than later.
Here are five reasons to buy property NOW
– A home brings a sense of security. There are a number of pitfalls to renting a property, such as paying for something you will never own, having to move when it is not convenient to do so, and the uncertainty of the rental market regarding rental increases.
– You are secure in your job and it is unlikely that you will be transferred elsewhere in the next five years. This will give you a chance to build up some equity in the home.
– Homeownership brings stability. There comes a time when we all want stability in our lives. Settling down in a familiar neighbourhood, with schools where friends are made and the community to call your own are important.
– Accumulating capital. Historically, homes go up in value over time. Your first home probably will not be your last and an increase in value is likely to assist you when looking at more expensive properties in the future.
– It is easier to adapt a home that you own to your future needs than it is to constantly find yet another suitable rental property. Of course, this ties in with accumulating equity.
Ultimately, you need to make a practical decision, because only you know your own needs, wants and dreams.