Especially for those who are used to having the flexibility of being able to relocate after living out a couple months’ notice, being locked into a home loan for the next twenty to thirty years can feel somewhat intimidating. Instead, new homeowners should concentrate on the fact that, unlike rent, each monthly instalment on the home loan is a further investment into their future wealth.
Furthermore, new homeowners keep an eye on annual house price growth instead of watching out for annual rent escalations. “As a tenant, the possibility of annual rent escalations loomed ominously above your head. Now, as a homeowner, the reality of annual house price growth is a nice incentive to keep up with the repayments on your home loan.”
Similarly, new homeowners will need to pay attention to the MPC’s interest rate announcements, as these will have a direct impact on the interest charged on their home loan. The MPC meets every second month to decide whether interest rates need to be adjusted to combat inflation and manage other risks to our economy. New homeowners will need to listen out for these announcements so that they can plan for the new instalment on their home loan should the prime lending rate change.
As a final financial mindset that needs to change when tenants become homeowners, new homeowners will need to get used to the idea that the ongoing maintenance costs that the landlord used to take care of on their behalf, will now be their responsibility. Many new homeowners fail to plan for emergency expenses that crop up with property ownership, which makes it difficult for them to afford the repair work when things break unexpectedly. It is therefore advisable to have a readily available savings account in which to dip into in case the geyser bursts or the roof starts leaking, and you need to see to this immediately.
Once you have become aware of these realities, it will become easier to adjust to thinking like a homeowner and to start reaping the benefits of homeownership.