Save on the wedding and buy a home

If you’re planning to take advantage of dry, sunny weather to get married in the next few months, why not give yourself the deposit on a home of your own as a wedding present?

“Buying a home is still the best way for most people to build a financially secure future, with their monthly payments going towards the purchase of an appreciating asset rather than just paying a landlord,” says Rudi Botha, CEO of leading mortgage originator Betterbond.

“So while many young couples dream of a lavish wedding, most would do better to keep the celebration simple and put the savings towards the purchase of their first home.”

And among their family and friends, he says, there is much to be said for the old custom of giving a young bridal couple a gift of cash to help swell their “property fund”, instead of household goods and other items with a limited lifespan.

“Clearly, the bigger the deposit the newlywed couple have in hand, the more easily they will qualify for a home loan – and the smaller their monthly instalment will be. This will make it easier for them to afford their home and to weather any interest rate increases in their first years of ownership.

“On the other hand it may mean that they are able to pay an additional amount per month over and above the minimum repayment, and so build equity in their home and gain financial leverage. It is useful later in life to be able to borrow against equity to pay for other expenses, such as the education of children or improvements that will add further value to the property.”

However, Botha does caution that newly married couples should, like all other prospective buyers, pay attention to their overall financial position before shopping for a home.

“They should first reduce or pay off other debts such as student loans, car loans and credit card balances and make sure, with the help of a mortgage consultant, that they will really be able to afford both a monthly home loan repayment and the other costs of homeownership such as rates and taxes, the municipal charges for utilities and maintenance,” he says.

“In addition, they should obtain copies of both their credit reports to see where they stand in the eyes of lenders. It is often the case with young people that their credit histories need to be cleaned up before the banks will consider them for a loan, or offer them a lower interest rate, and mortgage consultants can also advise them on this.”

And finally, Botha says, young couples should not neglect to take out life insurance, for at least the amount owing on their bond. “That way, if something tragic should happen to one of them, the other will at least not be at risk of losing their home.”

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