Page 47 - TODAY magazine Issue 1 2021

YOUR WEALTH // PROPERTY
for you?
For all of us, owning our own home creates a sense of belonging and offers security.
In a 2020 Old Mutual Rewards survey among its members, 61% said that owning
a home is their top financial priority. Buying a car came a distant second with 37% of the votes.
Much as you might want to own your own home, though, we all know that life happens and that our plans sometimes come to a screeching halt. Renting does come with advantages, too. For one, you
are more flexible and won’t have all the expenses
of a homeowner. Owning a home, while more expensive, is a long-term investment that offers greater stability. Either way, it is a personal decision.
THE PROS AND CONS TO CONSIDER
Commitment Home loans usually have a repayment period of 20 to 30 years while a lease on a rental typically is for a year.
Insurance If you own your home, you are responsible for the rates and taxes, maintenance, homeowners’ insurance and third-party liability claims if anyone is injured on
the property. On top of that, you will need household contents insurance. When you live in a rented apartment or home, you only need to insure your household contents. The rest will be covered by your landlord. Owning an asset Once your home is paid off, it will be an asset that is likely to increase in value over time, while a rented apartment remains the landlord’s property. Interest rate fluctuations Even if your monthly bond repayments increase when the interest rate goes up, your property’s value probably will continue to grow. If interest rates come down, so will your monthly repayments. If you rent, though, interest rate cuts will benefit your landlord but your rent won’t come down. Rent automatically increases each year and if the area were to suddenly become sought-after and the property increased in value, your rent could go up even more than usual.
// 45 // ISSUE ONE 2021