How to protect your finances while owning a home

Owning a home is a major financial milestone, but it also comes with responsibilities. While homeownership can help build wealth over time, poor financial decisions can lead to unnecessary stress and even financial hardship. The key to long-term financial security lies in careful planning, disciplined budgeting, and smart saving habits.

Below are three common financial pitfalls homeowners face—and how to avoid them.

Buying beyond your means

One of the biggest mistakes homebuyers make is purchasing a property that stretches their budget too thin. While it’s tempting to buy the biggest house you qualify for, this can leave you financially vulnerable, especially if interest rates rise or unexpected expenses arise.

How to avoid this mistake:

Before buying, it’s essential to calculate affordability realistically. MyProperty’s free online bond calculator can help determine how much you can comfortably afford. Beyond the home loan, buyers should also consider hidden homeownership costs such as rates, taxes, insurance, maintenance, and levies, as these expenses can quickly add up.

Getting pre-approved before house hunting ensures buyers understand their price range, while comparing different home loan products can help secure the best interest rate and repayment terms. By purchasing within their means, homeowners can protect themselves from financial strain and ensure they can comfortably maintain their home.

Financial questions you should ask before applying for a home loan

If you are getting ready to apply for a home loan, you need to assess your financial well-being and you should know the answers to the following questions: 

What is my credit score?

Would-be homebuyers should know their credit score and check their credit record to ensure that everything is in order. It is possible for negative credit information to be recorded by mistake. Checking your credit record before applying for finance will allow you time to rectify any mistakes that could harm your bond application success. Consumers are entitled to a free credit report each year, so they should be sure to check it.

Any accounts or bills that have been handed over for collection should be paid and sorted out before applying for finance. Defaults or slow payment notifications will have a negative impact on a credit score, so it is important to make payments timeously.

What is my annual income?

The bond amount that a consumer qualifies for will be determined by their income. So it is important to include any bonuses or annual investment returns when making this calculation. Annual tax return documentation will assist you in determining your actual yearly income. Get these documents ready before applying and ensure that you are up-to-date with all tax submissions.

How much debt do I have?

Disposable income is a key consideration when the bank considers the home loan amount they are willing to grant. For this reason, you should try and get rid of debt or at least pay it down as much as possible. The bank will require applicants to provide them with a list of their monthly expenses to determine the debt-to-income ratio.  The ratio will be used as a measurement tool to determine the appropriate bond amount that the applicant can afford. Having a lower debt-to-income ratio will be highly beneficial to consumers who want higher bonds.

What kind of deposit can I put down?

More often than not the bank will require a deposit. The deposit can vary between 10% and 30% of the purchase price of the property depending on the circumstances.  Aside from the deposit, you will also need additional money for the costs associated with buying a home such as transfer fees, attorney fees, and bond costs.

What can I afford?

In an ideal situation, the monthly house payment, which includes the bond, interest, taxes, and insurance should not take up more than around 30% of your income before taxes. It is possible to get an idea of your affordability levels from an online bond calculator or with the help of a financial professional. 

Here is our guide to determining how much you can afford

Failing to create and stick to a budget

A home loan repayment is just one part of your financial picture. Without a proper budget, homeowners often find themselves overspending and struggling to save.

How to avoid this mistake:

racking expenses for a month can provide valuable insights into spending habits and highlight areas where adjustments are needed. Using a budgeting method such as the 50/30/20 rule—where 50% of income goes to necessities, 30% to discretionary spending, and 20% to savings and debt repayment—can help structure finances effectively.

Budgeting tools make managing household expenses more convenient and ensure that homeowners stay on top of their spending. Since expenses and income fluctuate over time, it’s important to review and adjust the budget regularly. A well-planned budget helps homeowners maintain control over their finances, avoid unnecessary debt, and work towards long-term financial security.

Neglecting emergency savings

Homeownership comes with unexpected costs—plumbing issues, appliance breakdowns, roof repairs, and more. Without emergency savings, these costs can create financial stress or force homeowners into debt.

How to avoid this mistake:

Setting a savings goal of at least three to six months’ worth of essential expenses provides a financial safety net for unforeseen repairs and maintenance costs. Even saving small amounts consistently—such as N$500 to N$1,000 per month—can add up over time and make a significant difference. Keeping emergency savings in a separate account ensures that the funds are available when needed and not used for everyday expenses.

For additional protection, homeowners should explore insurance options that cover unexpected repair costs. By prioritizing emergency savings, homeowners can avoid relying on credit during financial emergencies and ensure long-term stability.

Homeownership is a rewarding investment, but financial missteps can turn it into a burden. By buying within your means, maintaining a solid budget, and saving for emergencies, you can enjoy greater financial freedom and make the most of your property investment.