Investing in homeownership early could be worthwhile for young professionals

Starting your home ownership journey early in life seems like a pipe dream to most young professionals at the start of their careers. Our data from 30 June 2022 shows that home ownership in our customers under 35 years only sits at 7.5% of total home loans. Most young professionals in their mid-twenties hold off on buying their first home and opt to rent whereas the ultimate question worth considering is whether to rent or to buy.

While renting an apartment seems to be the default standard among young professionals as soon as they get their first job, starting their home ownership journey is a very real, often gainful option that is beneficial in the long term.

LONGER LOAN REPAYMENTS FOR EARLY HOME BUYERS?

FNB Head of Secured Lending, Nkosingiphile Mkhonta, said that based on the data we can see an alarmingly low rate of youth home ownership that has prompted the conversation on highlighting the benefits of home ownership in the early stages of one’s career.

“What most young professionals don’t realise is that buying a home in the earlier stages of their career actually works in their favour as it makes them eligible for longer loan tenure, making repaying their home loans more affordable.?In the end, it is likely that these repayments end up being similar to the rentals that one would pay on a monthly basis” Mkhonta explained.

BUILDING EQUITY FROM YOUR FIRST HOME?

Another benefit of investing in a home much earlier in your career, isit that can contribute to your net worth early on in life. By buying a home you are building equity, and it can increase as you pay off your home loan or when the market value of your home goes up. The money that would have gone into rent can be used to pay off your property improving your balance sheet significantly.

“All things considered, not only is buying a home at an early age beneficial because of the longer tenure as repayment terms can be can up to 25 years, but the appeal is that it also opens up real opportunities for wealth creation as the mortgaged property can be refinanced to purchase more property or income generating assets at a later stage”, Mkhonta added.

SECURING YOUR DREAM HOME MADE EASY

Speaking on the ease of starting your home ownership journey early with FNB, Home Loans Manager, Zababa Zwane said that they have made it easy to secure a loan and have a keen interest in walking the journey with first-time homeowners.

“Our range of expertise allows for us to have the necessary conversations, giving guidance on what to look out for as there are definite things to consider that a first-time buyer might not be aware of such as where the property is located, conditions of the house and the need for inspections,” Zwane said.

Zwane added that the FNB Home Loan is not meant for just buying a home but also for building one or used as a property investment option. She further mentioned that before one decides to finance property, one need to understand what options they have and what would suit their needs.

THINGS TO CONSIDER WHEN BUYING A HOME

Additional costs: Homeownership costs go beyond the mortgage payment. Although financers will sometimes include all costs in your loan, the buying process may involve additional costs like property valuation, bond costs, transfer costs and deposits which you may have to finance out of pocket.

Growth needs: The home you buy early in your life, although a great investment, might not be the home you want to live in when you’re older or start a family. It is important to consider your growth needs and how you will be able to adjust when the time comes. Will you rent it out? Will you sell? Will you extend the existing home?

Consider the marketability of the area: Location matters. In the case that you want to sell the home eventually, you must make sure that it is in an area that will make it easily marketable. A great location creates desirability and makes it easy to find a buyer for a home. Do your research and buy in a location that has a promising future.

Get life insurance: To qualify for a home loan, you need to have life insurance or take up loan protection cover. This protects yourself and your loved ones in the event that you pass away or become permanently disabled and you cannot service the loan.

Are you ready to invest in your first home? This is the documentation you need to apply for the FNB Home Loan:

·????????Copy of title deed and offer to purchase

·????????Proof of income

·????????Identity document

·????????Details of assurance policy ceded to the bank

·????????Monthly income and expenditure

·????????Statement of assets and liabilities

·????????Three months’ bank statement if not an FNB customer

To apply, go to App Apply on the FNB App, and for more information on how you can start taking the right steps towards becoming a homeowner, call 800 6100.