Essential budgeting tips for homeowners and the benefits of downsizing
Category Advice
Following the latest interest rate bump, homeowners could be spending thousands of Rands more each month just to keep up with the repayments on their home loans. This could leave many homeowners looking for ways to cut back to make up for their higher debt repayments.
READ: Tips on how to calculate the interest on your home loan
READ: Overcome interest rate challenges: Boost your deposit
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, explains that accurate budgeting will become more and more important to homeowners in order to make sure they stay on top of all their repayments.
"Setting up a monthly budget - and sticking to that budget - is a vital component of homeownership," he notes. "Purchasing a home is one of the largest purchases a person will make in their lifetime, so it is important make provisions for how you plan to continue to afford the purchase."
Setting up a household budget will also allow the homeowners to see exactly where their money is going each month. "The visual representation of a monthly budget makes it easier to identify where money is being spent unnecessarily, which helps when the need arises to cut back on expenses," Goslett explains.
With interest rates being as high as they are, Goslett also challenges homeowners to cut back as much as they can so that they can even afford to pay extra on their home loans. "Debt is incredibly expensive right now. If you can find a way to pay in extra on your home loan repayments, you could end up saving hundreds of thousands in interest charges over the span of the loan term."
Those who are struggling to find ways to cut back are encouraged to rethink some of their lifestyle choices. "As difficult as it might be, homeowners will need to start changing their spending habits to make ends meet," he advises.
READ: Local property market ups and downs and tips for buying a home
Below are a few lifestyle expenses homeowners should consider when trying to find ways to cut their expenses:
- If you don't already, start purchasing groceries in bulk to cut down on your monthly food bill - and avoid buying fast food, takeaway coffees, or eating out. The average cost of a takeaway coffee is around R30. If you do this daily, five days a week, you're spending around R600 a month just on coffee.
- If you need new clothing, consider thrift stores or second-hand items sold through Facebook Marketplace. Avoid buying anything on store credit (unless they're interest-free accounts) and, if possible, pay these off as soon as you can and close the accounts.
- Cancel any unnecessary subscription services. These days, it is common to have subscriptions to multiple streaming services. Try to limit your household to just one at a time to save a couple of hundred rands each month.
- If your cell phone contract is nearing its end, switch to pay-as-you-go instead of opting for an upgrade.
- Shop for cheaper brands. It is worth finding cheaper alternatives for your daily consumables, such as perfumes, deodorants, make-up, cleaning and food supplies, as this will go a long way to helping you reduce your monthly expenses.
"As challenging as it may be to adjust your lifestyle, effective budgeting requires discipline and consistency. By actively managing your finances, you can maintain a healthy financial position as a homeowner, which will help towards creating greater financial stability for you and your family both now and in the future," says Goslett.
READ: First-time homebuyers' fears - how to overcome them
On May 25, 2022, an insightful article was published, offering valuable information, featuring Ana Roberts of Just Property Upper Highway, and Graham Ross of Just Property Blouberg, says that another great benefit of downscaling is that small spaces require less furniture - a few great statement pieces allow for simple, minimalist décor and a beautiful, welcoming home at a fraction of the cost of furnishing a big house. And the cleaning is a breeze!
Less clutter equals less stress, and isn't that what we are all looking for now?
Tips for cosy-home hunting:
Location, location, location - You want to remain close to your family and friends, and have ease of access to stores and other amenities such as doctors, hospitals etc. Narrow your search to areas that tick these boxes.
What are your deal breakers? Does the home offer the main assets that are important to you, for example, a good kitchen, nice family space, shower etc?
Current wants vs future needs - If you are downsizing because the children have moved out and you are getting older, consider a single story with the ease of access rather than a property with stairs that may cause a problem later.
Growing pains - Will you be able to handle the upkeep of a big garden, or is it time for something smaller that is more manageable? Will your pets cope with a smaller space; is there somewhere nearby where you could walk them?
Fit for purpose - Will your favourite furniture fit in the new space? Make a list of every piece with which you can't part. Take measurements. Then take a tape measure with you when you start narrowing down your list of potential new homes.
Storage war - Is there enough cupboard space in the bedrooms and the kitchen? Do you need outside storage too?
Peace of mind - Check the security features of each property you visit. Find out how safe the area is and what security is available. Ask the neighbours, chat to the local police, and phone a security company that focuses on the neighbourhood.
Guest appeal - Consider how many bedrooms you will need going forward - if your kids have all moved out of home, you may only need one spare room for when they or your friends come to stay.
Paper trails - Remember to ask for compliance certificates, even those that aren't required in your province (for example, gas installations and solar geysers should come with a compliance certificate - if something goes wrong and you don't have one, your insurers may refuse to replace the geyser, or cover damage caused by a gas issue).
Complex questions - If you are moving into a complex or an apartment, be aware that there may be the added expense of levies, clubhouse fees and/or security. Ask about historical escalation rates and request a copy of the body corporate rules (if applicable.)
Ask your neighbours if there are any noise issues, does sound travel through the walls and ceiling? How old is the plumbing, the lifts etc - upgrading such items is very expensive and you'll have to contribute. What parking is available for guests?
Author: Property24