Found your Valentine? Start saving for a home

If you're a couple that has just decided to get married, you should really be spending more time on planning to buy your first home together than on planning a big splashy wedding.

That's the advice of Gerhard Kotzé, MD of the RealNet estate agency group, who says that although this may not sound very romantic, "buying a home is still the best way for most couples to start creating a financially secure future for themselves and their family, and that is an attractive proposition.

"So while many newly-engaged couples dream of a show-stopping wedding and big reception attended by all their friends and family, we believe they should seriously consider scaling down their plans and putting whatever they save towards the deposit on their first home."

He points out that many studies have shown that the average homeowner has a much higher net worth than the average tenant, and that paying a monthly bond instalment is what enables you to start building up personal wealth, in the form of an increasing amount of equity in your home. "You will be able to use this equity in the future to finance your children's tertiary education, your retirement plan, medical emergencies or even just home improvements that further increase the value of your property and your quality of life.

"So obviously the sooner you can get started on this plan the better, instead of just continuing to pay rent for the next four or five years, especially when you consider that property prices are continuing to rise, albeit slowly, and that couples are generally waiting longer to get married now and are already often late-starters on home ownership."

According to StatsSA, the median age of bridegrooms increased from 36 in 2015 to 37 in 2019 while the median age of brides increased from 31 in 2015 to 33 over the same period. In addition, the average age of first-time buyers is now around 35, which means that most are becoming homeowners (and starting to build wealth) at least 10 years later than their parents did.  

However, says Kotzé, they can catch up relatively quickly rapidly by paying a sizeable deposit on their first home, "so there really is an argument to be made for not going into debt for the wedding. In fact, if you share your dream with your family and friends, they may even be able to help you raise the deposit for your home by starting a crowdfunding campaign as a wedding present, or gifting you some cash instead of another set of glasses.

"This deposit will not only substantially increase your chances of being approved for a home loan, but could also help you score an interest rate concession on that loan - especially if you apply through a reputable bond originator. And that will further lower your monthly bond repayments while increasing the chance of you paying your home off early and saving many thousands of rands in interest."

With the prime rate currently at 7,5%, a rate concession of even 0,25% on a R1m loan, for example, would translate into total savings of R2000 a year on your home loan instalments - and more than R36 000 worth of interest over the lifetime of a 20-year loan.

"What is more, if you were to put your annual savings back into your loan account, you would pay off your home almost a year early and save a further R47 000 worth of interest. Adding just a few more rands a year would enable you to own your home free and clear before your future children even go to high school - which we think would more than make up for having a smaller wedding now."