Get on the property ladder, but don’t aim too high at first.

That’s the advice of Tjaart van der Walt, CEO of the RealNet property group, who says: “While returning consumer confidence is giving the property market a boost, full economic recovery is still a way off and we don’t think 2010 will be the year to make risky commitments.

“Now is undoubtedly a good time to buy a home in terms of price and affordability, but it is absolutely not the time to buy more home than you need.”

Rather, he says, those buying now should budget conservatively to ensure that they will still be able to afford their bond repayments even if interest rates rise by a few percentage points and even if their income stays the same this year.

“This sort of planning brings peace of mind and will allow you to really enjoy your new home, instead of fretting about finances and perhaps coming to regard it as a burden or a bad buy. What is more, it is likely to make it much easier for you to obtain a home loan in the first place.”

Van der Walt says the past year has really fuelled the trend towards living more simply and carefully, which has seen most working people cut back their spending on cars, furniture, energy and fuel, restaurant meals and even groceries.

“And we believe this conservative approach should also apply to home purchases. While owning a home is one of the best ways to start building wealth, consumers need to remember that wealth is generally built over time – and will actually grow better if you’re not in so much debt that you’re strapped to make the payments every month.

“For example, if you have extra cash, you can use it to pay off your bond faster, and thus grow the equity you have in the property more quickly than by relying on property price increases.”

Article by: www.realnet.co.za