19 February 2018
Starting Point Tips for Home Buyers.
Are you ready to buy a home? Buying property is a long-term investment and in fact, until you are bond-free, it is more of a liability than an investment. Property prices are not currently in line with inflation or general salary increases, so even selling your property for what you paid for it (including your initial costs and maintenance costs) may be difficult. That is, if you intend to sell within a few years of buying.
The following check list will assist you in deciding whether or not you are ready to buy a property.
- Deciding whether or not you are able to afford a property requires you to look further than just the "price tag". There are many other costs involved in purchasing property that you may not be aware of, especially if this is your first time entering the property market. You need to make allowances for fees such as bond registration costs, transfer duty, furniture removal - or purchase costs of furniture, utilities, rates and levies, insurance costs, security precautions, any repairs and/or maintenance, etc.
- Start saving. In the last few years, the banks have all changed their home loan lending policies. Unless you a re a first time home buyer and comply with certain requirements laid down by the bank, you can no longer obtain a loan equivalent to 108% of the property's value. In fact, in certain instances, you may only qualify for a loan equivalent to as little as 60% of the purchase price and the rest (including the registration and transfer costs) will have to be paid out of your pocket.
- Are you ready to take on the maintenance costs of a home? A house is not a simple, once-off, lump sum payment and unlike renting, a home owner is responsible for the financial burden of maintaining his property. Make sure that you have both the time and money to take care of things that need maintenance or repairs around the property. Leaving your home to fall into a state of disrepair will severely affect its resale value - not to mention the fact that it will also infringe on your general standards of living.
- If you need to sell your current property, in order to buy another, it may be a good idea to put your property on the market first. Speak to estate agents operating in your area to advise you on a selling price, and also do your own homework as to what similar properties are selling for in your area.
- Do a comprehensive budgeting exercise to see how much you can afford for monthly home loan repayments.
- Obtain a copy of your credit report from the major credit bureaux and review the information. If there are errors or matters that need to be addressed, it is advisable to sort it out before you apply for a home loan. If you know that there are a few blemishes on your credit record, and you have been making an effort to clean up, let your bank know what they are, why they are there, and what you are doing to sort them out. Lenders will look at your credit and financial situation to determine how likely you will be to pay back the home loan. If you suffered unexpected circumstances that were out of the ordinary, like a loss of job or extensive medical bills, let the bank know so that they understand that it is not likely to happen again in the future.
- Make sure all your tax-affairs are in order. It will not hurt to just make an enquiry to SARS, to check whether all your tax-affairs are up to date. Your new property will not be registered in your name if you have outstanding SARS matters.
- Pay a visit to your bank, and ask a home loan consultant to assist you in finding out what amount you may qualify for, in terms of a home loan.
- Do your homework before you house-hunt. Decide what kind of home will suit your needs. Think about security, the size of your family (or of your future family size), the suitability for your pets, and so on. You should also consider to location in terms of travelling distance to work, schools, and so on. Enquire about affordability of the schools, rates and taxes, levies and other expenses/facilities in the area. Compare the cost of renting with the cost of bond repayments for a similar space in the area. If the cost of bond repayments is on par with or less than that of a monthly lease, then chances are the market is good for home buyers.
- While house-hunting ask the estate agent and/or owner as many questions as possible about the property.
- When the time comes to sign an offer to purchase, make sure you understand everything written in the contract. Do not sign a contract if you are unclear about anything. Rather ask advice from someone you trust.
- You will need to apply for a home loan. Once you have completed the home loan application forms, your bank will process the application and do the necessary credit checks and assessments. If everything is approved, you will receive a letter of approval giving the conditions and benefits of the agreement.
- Conveyancing attorneys will now register your home loan and transfer the property into your name. The previous owner of the property will be paid and you will become a home owner.
Buyer's and Seller's Paperwork Reference Forms.
- Make copies of everything that you hand over, post or submit to anybody, i.e. the estate agent, attorneys, the bank, and so on. You will be amazed at how important documents can get lost in the woodwork.
- Create a file for all your paperwork concerning your property transaction. If you are buying a property at the same time as selling your current property, keep two files (or one file divided into two).