When people think about a starter home, they may have a fixer-upper in mind. However, this is not necessarily the case. One person’s starter home might be what another person is looking for in a forever home. Generally speaking, a starter home is a property that will suit your needs for approximately the next five years or until your circumstances change, whereas a forever home is a property that you can see yourself living in indefinitely or at least for the next 20 to 30 years. It is the home that meets all the criteria of your dream home - the right location, the right size and all the features you would ever want or need.

The decision to buy a starter home now or wait will be determined by a few aspects, such as affordability and your individual needs. While most people would opt to purchase their dream home straight away, the large majority are not in a financial position to do so.  A few decades ago one income purchased a respectable home, however, in today’s market, two professional incomes still may not be enough to comfortably afford a home in some of the more expensive areas.

There are advantages of starting out with a more manageable property and upgrading at a later stage, such as being able to build up equity. Once in the property market, it is easier to build from there, as you have an appreciating asset that you can sell to upgrade. There is also the option of keeping your starter home as an investment property and renting it out to get a passive income.

Living in a starter home will also give you a chance to assess what features you want in your dream home and what you don’t, as well as get a handle on the different responsibilities and expenses that accompany homeownership.

If you decide to wait for their forever home, ideally you should rent a property that is reasonably priced so that you can build up as much savings as possible to put down a sizeable deposit. The larger deposit they can put down the better, as this will reduce the monthly bond repayment. An advantage of waiting is avoiding the chance of being stuck with a property in a bad time to sell and being unable to move up. A disadvantage of waiting is home prices will continue to increase, so something that is not affordable now might be potentially less affordable in the future.

While everyone is hoping to earn more in the next few years and have savings – land is limited. The population continues to grow, while the available property remains the same. Even though real estate is cyclical and will have its ups and down, it will be harder to purchase your dream home without first getting into the market.

Here is some advice to buyers who want to fast-track their forever home purchase:

Start where you can and build up

The first property bought may not be your dream home, but it’s a foot in the door.

Have extra money saved for expenses

Around 5% of the value of the home saved for other expenses, such as maintenance or renovations.

Pay more to reduce the bond term

An additional payment of just R300 on the monthly bond repayment can reduce a 20 year bond of R500 000 by almost four years, lowering the amount of interest paid over the term of the bond.

Prepare for the unexpected

Prepare financially for possible future scenarios such as an interest rate increase or any other scenario that could financially threaten plans.

You can still enjoy the benefits of owning a home and having your foot in the door without over-committing yourself financially and compromising your well-being in the future.