In May 2023 the South African Reserve Bank’s (SARB) action left some home owners running for the hills. We saw another 50 basis point increase in interest rates – taking the repo rate to 8.25% and the prime lendingrate to 11.75%.

The repo rate is the rate at which big banks (FNB, Capitec, etc.) lend money from the SARB. The prime lending rate is the rate you are charged by your bank when they loan you money for a car, credit cards or a your home. 

All this interest rate talk has got me thinking again about the rent vs buy conversation. We’ve previously spoken about the financial implications of buying but let’s get into the benefits of “paying someone else’s bond”, as they call it 😉

Renting can offer a number of benefits over buying a property. One major advantage is the flexibility that comes with renting. Renters have the ability to move to a new location or downsize without the hassle of selling a property or dealing with the associated costs.

This can be particularly important for young professionals who may be early in their career and looking to explore different job opportunities or locations.

Another benefit of renting is the potential cost savings. Renting typically requires lower upfront costs compared to buying a property as well as lower ongoing expenses such as:

  • Rates and taxes
  • Home insurance
  • Maintenance costs

This can free up more disposable income (your income after tax) for young professionals to invest in other areas such as; retirement savings, education, or starting a business.

Finally, renting can play an important role in financial stability and long-term planning for young professionals. By renting, individuals can avoid taking on the financial burden of owning a property before they are ready and instead focus on building up their savings and investments.

This can lead to greater financial stability in the long run as well as more options for future financial decisions. Additionally, renting can provide an opportunity for young professionals to try out different living arrangements and locations before committing to a long term investment.

Needing help navigating your money life, I’ve got a FREE clarity call available for you. Let’s chat about how I can help you take level up.

Leave a Reply

Your email address will not be published. Required fields are marked *