[jonathanlydall]

This is a South African take on owning a home.

Author is correct that if you don’t live in the house long, the overheads such as transfer duties and legal fees make it somewhat expensive.

But over here we have a pretty high interest rate of around 10% and comparatively high inflation rate, which makes the initial purchase of a house be a bit challenging, but if you start paying more than the minimum as soon as possible you can find yourself in a financially more comfortable position.

My bank allows me to have something they call an access facility on my bond account (the account for the debt on my house). With this I can transfer extra money into my bond at any time and I can draw this extra money out at any time too, this extra money counts as extra paid on the principal.

This essentially means that any extra money I put in it is worth about 10% p/a in terms of the interest it saves me.

They calculate interest per day so even if extra money sits in there for only a few days, depending on the amount the interest saved could be worth a coffee or possibly a meal.

Although I settle my credit card every month, everything I route through it and don’t have to pay back interest free for the next 30-45 days is essentially saving me that portion of interest on my bond, so easily over a percent. And that’s before credit card rewards.

And while I don’t recommend this except for the most financially disciplined as it is a little precarious feeling, I have a second credit card which I’m able to settle using my first credit card, this adds yet another 30 days of essentially interest saving to me.

It’s a great way to save for something big over say a year or two, even if you draw everything you deposited out again two years later, it’s saved you from the interest in the meantime, so you’re still better off.

Then there is the effect of inflation. If you’ve been able to put a good amount extra into your bond each month, you will find that after 5 years or so it’s probably less financially burdensome than renting.

This is because since you bought the place, property prices have gone up, so has rent and so has your salary, but your principle debt has not increased with it, meaning you’re paying no more than you were 5 years ago for the monthly instalments, but due to inflation it is comparatively less expensive.

Anyway, that’s the financials aspect, but on the quality of life aspect, a few years ago we finally bought a house that should be very nice for our family for the next 20-30 years, in terms of size, comforts and security.

We also bought a house with an old interior and renovated it, making the bathrooms and kitchens modern and how we wanted them. Was also able to chase conduits into all the walls (brick and mortar houses are the norm here) so that every room has CAT6 going to it.

[JuniperMesos]

Is South Africa a place your family will want to be (or be able to be) for the next 20-30 years? What are you doing for electric power, water, and physical safety from violent thieves?

[jonathanlydall]

I’ve lived here most of my life.

Electricity has been essentially uninterrupted since the last load shedding about two years ago. I did get some solar panels and an inverter installed while load shedding was common as I work from home and didn’t want the stress due to lack of power. Another thing I put in our new kitchen is a couple of gas hobs next to the main induction ones, allows us to cook even during power outages. But as I said, no real outages in two years now.

Water is quite reliable, maybe interrupted half a dozen times in a year. I have 2kl of water backup tanks and a booster pump so I don’t generally feel any outage, although not uncommon, I expect that most middle class don’t have backup tanks like this. Regional water infrastructure hasn’t been keeping up with growth, so there is a large issue looming there.

Crime is common, but not so common that most people have been a victim of it. Most (middle class) people have house alarms linked to armed response services. I’m a member of community association which amongst other services they provide from membership fees, they also have a special arrangement with a security company and additional patrol vehicles are dedicated to our suburb.

Most security systems are door sensors and interior passive beams. I did however add outside beams which tends to catch intruders by surprise and gives early warning. I actually had an intruder in my garden last year and the outside beams caught the guy by surprise, he had dashed by the time the armed response got here. Harrowing for sure, but not tragic fortunately. Since then I added some IP cameras and there was a gap in my electric fencing above my garage which is where it seems they got in from, so I also had that remediated.

Our suburb (like many others, but not most) has road closures (gates get closed across most streets on the suburbs border) in effect except during morning and evening peak traffic times, this helps a lot, but criminals are regularly trying their luck in the area.

The intruder aside, and without load shedding, and being vigilant in case of criminals, it’s not that different than my 2 years I spent in Cork in Ireland where there was the occasional violence incidents with chavs and several water outages.

If I was living in a township (inhabited by those living well below a middle class wage) my experience would be quite different, probably lots more crime and I expect water and electricity to be quite spotty.

How will things be 10, 20 or 30 years from now?

My biggest worry right now is the water supply, but it’s more a worry of inconvenience of it being turned off regularly to manage demand. I’m expecting within 5 years they’ll have addressed it. Basically it’s a repeat of the electricity capacity shortage issue of the past, despite people telling government for over a decade they need to increase infrastructure to meet expanding demand, they do nothing until they run out.

Otherwise, I’m optimistic things will improve overall, not get worse. I think our democracy is maturing. The ANC which has managed to stay in power since the first democratic elections in ‘94 has been progressively losing voter share, it seems the masses are finally saying no to their excessive corruption and incompetence.