When should you leave the rental market behind?

“Renting is often a very necessary first step in the journey to homeownership. However, there also often comes a point where taking the step from tenant to homeowner becomes the most practical next move. If you find yourself in the position of wondering whether you are ready to buy, here are some key indications that it may be time to leave renting behind.” says Gerhard Kotzé, CEO of the RealNet property group.

“Your decision to purchase a property should be based on your financial readiness and future aspirations, and if they align, leaving the rental market could be a good move. With that in mind, here are some indicators to help you decide whether you are truly prepared to make the shift.

Affording a home loan is well within reach for you

One of the biggest indicators that you are ready to make the shift from renter to homeowner is financial stability. If you have a steady income, minimal debt, and a good credit score, then it will make more financial sense to invest in a property rather than paying towards someone else’s asset. A simple rule of thumb to follow is the 2.5 to 3 times annual income rule, which states that you shouldn’t aim to buy a property that costs more than 2.5 to 3 times your annual gross income.

You have extra savings for the unforeseen costs

Purchasing a property requires more than just loan approval. There will be plenty of additional costs for you to factor in, such as a deposit (10 to 20% of the purchase price), legal fees, transfer duties, moving costs, and potential maintenance costs. If you have enough to comfortably cover these expenses, it’s a good indication that you are financially prepared to own a home.

You are ready for a long-term commitment

Unfortunately, unlike renting, where you can almost pick up and go if you want to move, owning a property is a long-term commitment. A simple guideline to keep in mind is that you need to live in a home for around five to ten years before you can enjoy the full benefits of house price appreciation and a good return on your investment. Additionally, owning a home comes with responsibilities such as maintenance, repairs, and municipal costs.

“Taking the next step in the homeownership journey is a process that should be taken with careful consideration. If you align with the indicators above, then it will likely be a good time to start exploring your options in the property market.