Authors: Shaun Rademeyer
CEO of MultiNET Home Loans
5 June 2021
What will your property be worth in 20 years?
MultiNET Home Loans says it has recorded a rapid increase in first-time home-buyers since the start of the Covid-19 pandemic.
The unprecedented low cost of borrowing coupled with the major banks’ appetite to take on low or no deposit loans have created an ideal buying environment, particularly for first-time buyers. During the first quarter of 2021, 80.7% of applicants successfully obtained home loan finance, 61% of these applicants received a zero-deposit loan, it said.
The current approval rate across first-time buyers who required a zero-deposit loan is 79.3%.
This is a clear indication that property ownership is more accessible to first-time buyers who previously could only afford to rent a property. Renters are now able to pay a monthly mortgage which is far lower than what they were paying on a rental.
Home ownership makes so much sense in the long run; here are 3 reasons why:
- Owning a property is an investment into an asset
While you may have taken out a rather large home loan in order to purchase the house, you are essentially putting that money back into the property and will probably sell it for more than you bought it for. It is important to realise though that you do not need to immediately go for your dream house. Start small, and work your way up to the house you’ve always wanted.
2. Property ownership helps develop sound financial management
The strength of many wealthy people is their ability to budget and save their money. Owning a house means you are forced to make monthly payments. When it comes to drawing up your budget, make sure that the home loan repayment is one of the top priorities
3. Eventually the good will outweigh the bad
Initially the capital outlay for a house may seem excessive, however as the years go by, the loan will decrease and the appreciation in value will increase.
- If you buy a house worth 1.2 million in 10 years’ time you will owe the bank R750,000 and your property will be worth R1.86 million (this is an inflation growth of 4.5%)
- In 15 years, time you will owe the bank R388,000 and your property will be worth R2.3 million
- At the end of your 20-year loan period your property will be worth R2.76 million and you will have paid R1.032 million in interest to the bank.
- If we assume that inflation will average 4% over your 20-year loan period and your house price growth grew by 4.5% your home value in 20 years’ time at today’s value will be R1.319 million.
Andrew Carnegie, entrepreneur, and business leader is quoted as saying, “90% of all millionaires become so through owning real estate”.
Although he made this statement over a decade ago, not much has changed. Property investment is still considered to be one of the biggest investment opportunities of all time. Buying a property can leave a dent in the bank account, but do not see it as a grudge purchase instead see it as an investment.
“Recent reports have shown affordable properties in major metros to be the fastest appreciating property investments in South Africa – a trend likely to continue, making buying a home one of the smartest ways to invest in your future.” said Shaun Rademeyer, CEO of MultiNET Home Loans.
“And as more first-time home-buyers in SA turn to their sights on property ownership, the more MultiNET Home Loans will support them every step of the way, making it easier for them to get the property and the future they have always wanted,” said Rademeyer.
For first -time buyers, it important that they get sound advice and MultiNET Home Loans together with their affiliate partners can assist with all home loan requirements.
The original article can be viewed here: