Bank Better, Live Better
Moving in – the big day arrives06/05/2021
When buying your home, make sure you have included the running costs in your budget, writes Maya Fisher-French.
There is nothing more exciting, or nerve-wracking, than moving into your new home. You will remember the moment forever, as you sit on the floor unpacking boxes, sipping a glass of wine you realise that this is yours! This is the place where you will build memories and possibly raise your children. You have so many ideas and images about what this life will look like.
But then you realise you need to buy curtains, possibly some furniture (either because you have none or that couch/fridge doesn’t fit) and those ugly carpets really have to go at some stage. Moreover, you are still waiting for the shock of the first mortgage payment.
Apart from the mortgage payment, moving into your new home has additional costs you need to consider:
Before she moved in, Bontle had to pay for municipal connection fees. These came in at R1 459, but could have been higher if she was not on a pre-paid electricity meter. Some municipalities ask for a deposit to cover your first few months of utility bills.
Household contents/ moving
If you already have household contents, you may need to hire a removal company to move them for you. As Bontle was a first-time homeowner she did not have much to move except for clothing and her daughter’s furniture, for which she used the family van and muscle to do the move. However, she needed to furnish her home and all the furniture was bought brand new to make the house livable such as TV, couch, beds, fridge, microwave, kettle, iron and pots. Having a housewarming party is a great way to encourage friends to arrive with gifts like pots and pans – but make sure you don’t end up spending more money on entertaining them!
Most banks require a home loan customer to have life insurance or mortgage insurance to cover the debt should the customer pass away or become unable to work through disability. Bontle pays R493 to insure her mortgage, but the amount depends on the value of the loan and one can cede an existing policy or shop around with other insurers. The bank will also require building insurance in case something happens to the property. This covers common events like burst geysers or pipes, flood or hail damage as well as large events such as a fire. Bontle pays R598 a month for building insurance.
As a homeowner who is now accumulating belongings, Bontle is also preparing to take out insurance for her household contents. For example, she could buy R150 000 of content insurance including R10 000 cover for a cellphone and R10 000 for a laptop for around R220 per month.
Having now lived for a month in her new home Bontle is adjusting to her homeowner’s budget. Electricity has come in at a much higher rate than she hoped, mostly due to the cost of running the pool pump. The running costs of her home have added R5 402 to her monthly budget, and she is still planning on taking out household insurance. Her running costs are more than 50% of her mortgage repayment which is R10 337.
By Maya Fisher-French
*This is part 5 of a 6-part series in partnership with City Press, which takes a first-time home buyer through the process from beginning to end.
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first steps to buying a home
Buying your own home is a long-term investment and can be very exciting. Whether you are looking to buy a piece of land to build on, a flat or house to live in, investing in property can be expensive. So, you need to be sure you can afford the monthly repayment and are aware of possible additional costs.
Paying off your home
Once you have stabilised financially from the costs of buying a home, or you get salary increases, consider paying extra to your mortgage to shorten the time you will pay it off and save on interest, writes Maya Fisher-French