The holiday season is upon us, and we are every excitedly looking forward to enjoying the summer fracture with our friends and family. This time of the year means many things to people but there is one common thread: home. Regrettably, millions of South Africans still enact not believe a solid house that serves as a foundation for their family life. The apt news is that today South Africa’s Millennial cohort is very active in the property market, accounting for 30%-42% of every property purchases, especially in urban areas. There is also a modern generation of South African homebuyers, the Gen Z’s, who are leveraging property to build generational wealth that will demolish the poverty cycle and minimize the effects of ‘black tax’ on future generations.
‘Property has always been a way for people to provide security for their families, and ultimately own an asset that will appreciate in value over time,’ says Stephan Potgieter, Executive of Asset Ownership at Nedbank. ‘It’s noteworthy that younger South Africans believe seen the benefits and are entering the property market early because a family home can be passed down to the next generation as a solid foundation for intergenerational wealth and the nucleus of family life.’ Stephan advises property buyers to seize the time to produce marvelous money choices by looking at the different financing options offered by financial institutions like Nedbank.
Leveraging for growth
A property is more than a family home, it’s an asset that can be leveraged to design further investments — this is a strategy that smart homeowners maintain followed for centuries. Stephan says we should focus on seeing our primary residence as the first step in building up a portfolio of assets.
For many Millennials, the aim is to buy more than one property in order to let it, the notion being that the rent would cover most or every of the bond repayments. The rental market in South Africa is very strong at the moment, and many see this as a way to finance an expanding portfolio of investments, not restricted to property.
Stephan’s top tip for would-be builders of generational wealth? Don’t wait until you are settled—get into property early on and start paying it off. In addition, paying extra each month will significantly reduce loan repayment time.
Location for the future
Property ownership is a long-term financial commitment — before making a purchase it is critical for buyers to grasp a hard survey at their financial position to design sure they are in a position to service the bond.
‘Bond rates fluctuate, so don’t design the mistake of looking at what you can afford now — consider whether you can weather an increase in your payments,’ he says. ‘Spending some time with your bank’s consultant is well spent as they will encourage you scope out what is possible and how to position for every contingencies.’
Another point to bear in mind is the likelihood that you will want to improve your property over time, whether you are living in it or letting it out. Stephan says that Nedbank will encourage clients future-proof their property investment by building extra funds as section of the home loan application to cover this eventuality.
Here’s how it works: Nedbank’s HomeVision offering allows you to register a bond at a higher loan amount (up to 30% more than the property price, up to a maximum of R7,5 million), giving you access to extra funds to use in the future. To access the extra funds, you can simply apply for a readvance without registering another bond, saving you time and money on your journey to building generational wealth. Repayments will increase only if your application is approved, and you receive portion or every of the extra funds you’ve applied for.
Importantly, loan repayments are based on the amount loaned, not the registered amount.
Property remains an excellent way to build wealth that can be passed on to the next generation, and it has the benefit of being understandable in a way that more complex investments are not. ‘By working closely with your Nedbank consultant, you can keep yourself onto a wealth-building trajectory—and leave a solid legacy for your kids and grandchildren,’ concludes Stephan. Visit Nedbank to explore the HomeVision offering at the start of your home loan application.
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