It’s a big decision to make: Buy or build. Let’s look at the pro’s and con’s.
For most buyers, purchasing an existing property is much easier. You shortlist properties that meet your requirements, you view them, and you make an offer based on what you can afford, and what you believe market value to be.
In most cases, when purchasing an existing property you are able to take occupation in 1 to 3 months – and this makes planning your move fairly easy.
You apply for your finance, sign papers with the attorneys, and the next thing you know you are moving in.
On the negative, you may be purchasing a property that doesn’t fill all your needs – you may have had to compromise. Perhaps you also have to upgrade kitchens, bathrooms, and flooring. All these cost money and take time, and financing these changes, while possible, isn’t an automatic process and you will need to qualify and register a large enough bond.
What of building?
My dad always told me when he taught me real estate that no one is making anymore land. That’s so true now as the availability of vacant plots in the areas you may want to live in is poor.
However, if you were to find a plot you liked, then perhaps building is an option you should consider.
The one obvious positive is that you can build exactly what you want and need. You can choose your finishes – and you get to move into a brand new home. There is nothing quite like being the first to live in a new home – with everything fresh and new.
But it has its price. A new home has teething problems. Things will go wrong, and with it comes frustration. Building is also stressful, unless you find the perfect builder. You will also need to find alternative accommodation for the 5 to 8 months it may take to build, which is an extra cost.
Up until recently the banks were reluctant to offer good loan-to-value rates on building loans. However, for most of the banks this has now changed, and you should be able to qualify for the same percentage of finance to total cost as you would have on an existing home.
Another positive of building is that you pay transfer duty on the plot transaction only. In some cases this is a significant saving. But don’t forget to allow for the NHBRC registration fee on the new building, architect and municipal planning fees, and all the hidden costs. I’ve yet to find someone who came out on budget as we all like to spend more than we have.
The reality is that both buying an existing property and building a new one offer different but exciting challenges. If your circumstances allow and you can’t find a home that suits you, then don’t discount building.
But research the cost thoroughly so there are no nasty surprises.
Principal of Harcourts Platinum, and Director of Harcourts South Africa
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