The kids have flown the nest, and you no longer need a large high maintenance property – maybe it’s time to downscale? For some, this could be a tough choice to make, especially if they have lived in the home for many years and seen their kids grow up there. However, others may well look forward to a more relaxed lifestyle, unfettered by monthly bond repayments and the never-ending upkeep and maintenance that is part and parcel of owning a large freehold property.

Either way, when it comes to downsizing, there are a few aspects to consider.

The pros

There are numerous lifestyle benefits to downsizing from a large, free standing property to a smaller one. For one, you are no longer responsible for the upkeep and maintenance of a home, a large garden, a pool and other property features you may no longer use. You can also enjoy increased security a home within a secure development provides. Also, downsizing can result in significant monthly cost savings on rates and taxes, utility bills, maintenance and repair costs. Not to mention security and insurance costs. 

Run the numbers

The biggest expense in most households is the monthly bond repayment, and whether you will be free from this responsibility will depend on how well the family’s finances have been managed. If you have paid off your bond or at least the bulk thereof, it might be possible to sell the property, settle the outstanding bond and have enough capital to purchase a smaller property without having to enter into a new loan agreement.

On the other hand, if not enough equity has been built up, things could be slightly more tricky, especially if you are retiring. At age 65 and older, it is not easy to get a bond. In this situation, you will need to carefully consider what monthly rental or bond repayment you can afford on your lower pension income. Bearing in mind, it will also need to cover the costs involved in buying a new property, such a deposit, transfer costs and taxes.

Capital Gains Tax (CGT)

If you have lived in the home for some time and sold for a profit that exceeds R2 million, you will be liable to pay Capital Gains Tax. If the profit does not exceed R2 million and the home is your primary residence, then you will not have to worry about CGT.

Time is key

If it is not the best time to sell, consider delaying the decision to downscale by a few months as it could result in a better selling price depending on market conditions.  On the other hand, despite the current market conditions, units in secure complexes and retirement villages remain high in demand, and delaying the downsizing decision could mean missing out on a good buying opportunity.

What about letting it out? 

If the bond is paid off or there is a very small monthly repayment, perhaps consider renting out the property, rather than selling. Provided of course that the rental income exceeds the bond repayment and other costs. This option will require you to have enough cash flow to cover any vacancies. Letting out the property could be a great way to supplement your income.

Provided all aspects are considered carefully, downsizing can form part of a comprehensive plan that leads to a simpler lifestyle that offers financial freedom. A real estate professional or financial adviser will be able to give excellent advice on the first steps.         

South Africa is possibly one of the most beautiful countries in the world, with some amazing things on offer such as great weather, oceans, mountains, forests and everything in between. As a nation, we are truly blessed to call this country our home.

However, there is one aspect that unfortunately has many South Africans up in arms - the fact that so many people living in this country have been affected by crime.  Sobering crime statistics have made South African home buyers among the most security-conscious people in the world, and as a result properties with top-end security features or those located in security estates are highly sought-after.

While security estates provide a greater return on investment over the long term, not everyone can afford a property in one of these estates. But this doesn’t mean that they have to compromise on their safety and become easy targets. There are several ways to increase your home’s security and deter criminals – so don’t be a soft target.

Don’t make it easy to break in

Most intruders are looking for a home that is going to be as easy and quick to break into as possible. The longer it will take to break into the home, the less likely it will happen.

• Don’t leave anything out that could help them gain access to the home, such as garden tools or ladders.
• Keep brushes, trees and foliage trimmed back and ensure that the entrance is well lit and visible.
• Avoid leaving the garage door unlocked, regardless of where the car is parked.
• If you have space, a trained guard dog is a good deterrent.
• Talk to your children and domestic workers about the importance of identifying who is trying to gain access to the property.

The best deterrent is visible, physical protection

Security experts say that there is simply no match for physical barriers such as palisade-style fencing or good quality electric fencing. Bear in mind that when an electric fence is used on the perimeter, the gate will become the area that burglars will see as a possible weak point to gain entry, so have it set up to an alarm system.

Motion sensors and beams provide an excellent back-up to the physical barrier – these can also be connected to an alarm system as an early detection device.

Never make it known that you are away

Burglars would prefer to avoid a confrontational situation so they would rather break into the home when you are not there. Avoid any telltale signs that the family has gone away, such as uncollected post or newspapers. These signs will only make the home more vulnerable to possible intrusion. Install timers on the lights and leave a car where it is safe but visible from the outside.  

Always answer the intercom

One way criminals check if people are at home is by ringing the buzzer or intercom – so never ignore it, even if it is late at night. An unanswered intercom might be seen as an invitation to proceed. If the intercom does not work, remove or repair it as soon as possible.

Hide keys in unusual places

Housebreakers tend to take the vehicles in addition to the household contents. Avoid this by keeping vehicle keys, and spare keys hidden in unusual places - especially if you are going away on holiday.

Be involved in the community

Get to know your neighbours and assist in keeping the community safer by joining the local community policing forum or neighbourhood watch. 

Prevention is better than cure. It is not possible to completely ensure that your home will never be broken into, however, taking the necessary precautions is a positive step forward to ensuring your home and its occupant’s are safer.

There are several advantages that buying a home has over renting, such as the sense of ownership and not needing to get permission from a landlord to do anything to the home.

Another major benefit is that owning a property is, in fact, a kind of forced saving. The reality is that most South Africans do not save enough money for their retirement. Paying money into a bond every month is a way of building equity and preparing for the future. Owning a home means that you have an asset to sell to set you up for the golden years – a luxury that those who have rented their entire lives will not enjoy.

If you want to make the most out of a property investment, the secret is to get into the market as soon as financially viable. This might mean tightening your belt initially to meet the monthly repayments, however, assuming there are no drastic changes, a 20-year bond will decrease in real terms as your income increases. The bond will become more affordable as time passes, so the earlier you get into the market, the better off you will be.

While getting ready to buy a home requires some preparation and time, the actual process can be simplified into three basic steps:

Get pre-approved

When you are ready to jump into the market, it may be tempting to hit the show houses as soon as possible. However, it is best to start by paying a visit to the bank or a bond origination company to get pre-approval.  The pre-qualification process is essentially an affordability assessment based on your earnings and credit profile. Pre-approval gives you an idea of what price bracket you can shop around in, narrowing down the search considerably and helping to reduce the risk of disappointment.

Remember to factor in all costs when determining what is affordable, such as transfer fees, attorney fees and any renovation costs if applicable. Ideally, there needs to be a little wiggle room so that you can weather an interest rate hiking cycle.

Make an offer

It is best to work with a real agent estate from a reputable brand that has extensive knowledge of the area in which you want to buy. The agent should inform you of any new stock that comes onto the market that fits your criteria. Keep in mind that the adage of location, location, location always rings true.

When you think you have struck gold and found the “one”, take a step back and get a trusted second opinion from friends and family members, who will view the home objectively. They may see things you won’t and be able to point out defects you may have missed. These aspects should be taken into consideration when making the offer.

The agent will be able to guide you through the process of making an offer and what they think the seller will accept. They will also be able to provide you with the comparative sales prices of similar homes in the area. 

Apply for the bucks

Once the seller has accepted the offer, it's time to get the money in order. You can either approach the bank directly or make use of a bond originator. The service provided by the bond originator doesn’t cost you a thing. The benefit of using an origination company is that they will apply at all the banks at the same time to secure the most preferential interest rate. Provided that all paperwork is in order, you should receive an answer regarding their bond approval within a week. 

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.

The thought of buying a home that no-one else has lived in is a very appealing concept to many buyers, which is why off-plan property purchases have become so popular over the years. Especially in boom markets where the demand for homes outweighs what is available for purchase.

It can be more cost effective

Other than the fact that no-one else has owned the home before you, another reason that off-plan purchases have grown in popularity is that these properties are often less expensive to buy than existing homes with similar features within the same area.

Often homes that are sold within the first phase of development are more affordable than those sold in the later stages. Additionally, the initial deposit requirements are often comparatively far less than other types of purchases. Buying off-plan may mean that you will have to wait between six months and a year to take occupation, but this could be an advantage, giving you more time to save up for the other expenses related to the purchase. Also, the value of the home will invariably go up from the time you sign the contract to the time the home is complete.

Make it your own

Another drawcard is that you can personalise your home to some degree regarding the finishes and materials used for some aspects of the build. You will have a certain amount of freedom in tweaking the design of the property and its layout.

NO transfer duty

Yes, that’s right – NO transfer duty.  Although still liable for the usual conveyancing fees, a buyer who purchases a home off-plan will not have to make provision for transfer fees over and above the purchase price. If you buy a home during the development stage, the developer will charge VAT on the transaction instead of the regular transfer duty.

So what’s the catch?

There are several benefits to purchasing a property off-plan, but it has its challenges.  Even though you may have seen an artist’s impression or a show house, there is no way of knowing if the home you get will meet expectations. Most building agreements will allow the developer to deviate from the plans by between 5% and 10% without letting you know. So, if you don’t keep a close eye on the build, you could find the layout, size or features of your home altered to some extent. To a large degree purchasing a home off-plan is taking a leap of faith.

Do your research

Check out the developer beforehand. Before going ahead with the purchase, do your research on the developer and check the records of any previous projects they have completed. Chances are if their other developments were a success – yours will be too. Remember that you can also ask the developer to provide you with evidence of membership to associations such as Master Builders South Africa or the National Home Builders Registration Council.

Although it is great to be the first owner of a newly built property, you may have to put up with living on a building site during the initial stages of the development’s construction. There is also the matter of dealing with any items on the snag list and possibly establishing a garden from the start. All that said, any issues that you may have to overcome when purchasing a home off-plan will be a small price to pay for the chance of owning a newly built home that you can call yours.

Once you have narrowed down the search and found the ideal home, the next step is to put pen to paper and make an offer to purchase. While this may seem overwhelming at first, there are a few simple guidelines that will make it a far less daunting experience.

An offer to purchase is essentially an agreement that lays out the terms and conditions of the property transaction between the buyer and seller. All of the terms and conditions will need to be agreed upon by both parties before the contract is signed. It is imperative that everything that each party has agreed to is put in writing and listed in the document to avoid possible conflict further down the road. Once the agreement is signed by both parties, it is a legal and binding document.

An offer to purchase serves to protect the parties involved in the transaction and ensure that nothing is left to interpretation. If there is any ambiguity it could lead to conflict, so is best to be avoided. The offer to purchase must thoroughly cover all agreed upon terms, which should include issues such as the date of occupation, occupational rent, fixtures and fittings and the conditions of sale. If there is any clause that needs clarification, ask the agent for an explanation or obtain a professional opinion from a lawyer. Once the offer to purchase has been concluded and signed, it will become the deed of sale.

Each party must be in agreement as to what items are included in the sale of the property and what aren’t. As a general rule of thumb, any fixtures or fittings that are attached to the property (nailed, bolted, glued or screwed down) will stay.

It is fairly common for a buyer to submit an offer to purchase while they own another property. It is also common practice for buyers to include a condition which states they have submitted the offer subject to bond approval.  In these situations, the offer to purchase will include suspensive conditions stating the sale is only subject to these conditions being met.

A suspensive condition will normally have a time limit that will depend on the agreement made between the buyer and seller. Once met, the estate agent should be notified without delay so that the agreement can be made unconditional. This step in the process is vital because it could become null and void and the whole transaction could fall through if the requirements have not been satisfied on time.

The offer to purchase must include the date of occupation, which stipulates the date on which the seller will vacate the property, and the buyer will take occupation. This will determine whether either party may need to pay occupational rent. The buyer will be required to pay occupational rent to the seller if they move into the property before it is registered in their name. Conversely, occupational rent will be paid to the buyer should the seller not be out by the time the transfer of ownership has occurred. 

Once negotiations have ended, and the ink has dried on the document, the buyer’s deposit will be placed into an interest-bearing trust account until the transfer of ownership is complete. The interest on this account will be for the benefit of the buyer.

If used correctly, the offer to purchase will make the process of buying a home as easy and transparent as possible, assisting buyers and sellers to avoid any misunderstandings.