5 PRACTICAL TIPS FOR BUYING A HOME ON A SINGLE INCOME

Married couples no longer dominate the real estate market in South Africa, as single females now make up the largest portion of buyers. Although the process of buying a home on a single income may seem daunting at first, it can be an extremely good financial move if done correctly.

For those who want to ensure that their property investment is a success, below are 5 nifty tips to help you buy a home on a single income:

Evaluate your income and create a realistic budget
Buying a home is a big financial responsibility and a great long-term investment. Since you don’t have the safety net of a joint savings and income, you’ll need to be extra smart with your money. It’s vital to work out an affordable budget and stay within those limits. When deciding what you can afford, consider all your monthly expenses such as home maintenance and repairs. Be sure to determine what you can put aside towards your emergency fund. Considering that you’re the only person responsible for the bond repayment, you need to put enough money away to counter any unexpected circumstances or loss of income. 

Pay the deposit when buying a home
Though banks are becoming more and more open to granting 100% home loans, it’s advisable to have at least a 10% deposit saved up, along with enough money to cover all the other costs associated with buying a home (including transfer duty, attorney fees, home insurance and bond costs). Paying a deposit will also secure you a better interest rate and lower your monthly repayments, which comes in handy when you only have one income to pay the monthly expenses.

Be realistic with what you can afford on a single income
The reality is that purchasing a property on your own may include compromising on certain aspects and features. Ideally, you should look at the location before the property itself. A property can be renovated or changed, but location cannot. It’s important to research the areas that are within your budget and then work from there. Buying in a better area might mean purchasing a smaller home. However, it will be a wiser investment that will see greater returns over the long term.

Think long term when buying a home on a single income
When purchasing on a single income, you can’t rely on a partner to help you out of a bad investment. To ensure that you will one day make a profit on the sale of the home, you need to purchase a home you can imagine living in for at least the next five to ten years. Your lifestyle and plans will largely determine the type of home suited for you. Are you looking for a home with the potential to add-on or merely a small starter home that can be rented out in the future? The answer to these questions will help you narrow down your search and pinpoint the right property to meet your needs.

You also need to decide if you are purchasing a home to live in or purely for investment purposes. If the home is purchased as a primary residence, the motives and reasoning behind the decisions being made will be far more emotionally driven. If the home is for investment purposes, decisions will be made solely on research and logic. So, you’ll need to purchase in an area that will attract tenants, which is within proximity to public transport, amenities, and schools.

Something else to consider is that a sectional title means less maintenance and possibly a lower bond repayment; however, you’ll have levy costs and the rules and regulations of the body corporate. On the other hand, a freehold home would offer you the freedom to do whatever you want to the property, but it could be less secure and more expensive to maintain. 

A single income doesn’t mean you’re alone
Purchasing a house on a single income doesn’t mean every decision has to be made alone. Family and friends who have purchased property can act as a soundboard, providing honest and objective feedback. You can also reach out to an experienced real estate professional who can provide you with guidance and advice through the home buying process. They’ll be able to provide information regarding the suburbs they work in, as well as the best properties to suit both your lifestyle and budget.