Buying your first home is a very special occasion. From the day you start earning your first salary, you always have that image in your head, walking into your recently purchased home with that new house smell still fresh in the air like a new coat of paint.
Many dream about that day, but few are prepared for the little hurdles along the way. We’ve compiled our Top 6 tips to help you prepare for this momentous occasion, and hopefully help you secure your dream home.
1. What can I afford?
This goes without saying, you can’t buy a house you simply cannot afford. Therefore it’s very important that you know the exact state of your finances before you move on to the next step. The relationship between your income vs expenses will play a vital role in identifying whether you’ll be able to make the monthly bond repayments, and should also serve as a deciding factor on whether you buy a house or not. Once you’ve determined what you can afford, the house hunt can begin!
2. My credit score
After you’ve decided on which house to buy, you will have to apply for a home loan should you require one. The bank will then check your credit score (a three-digit number between 000 and 999, calculated by the credit bureau based on your financial history) to determine whether you qualify for a home loan or not.
Anything above 600 is a good credit score, anything over 670 is seen as a great credit score. It’s important to know your credit score status before starting your house hunt, as you’ll still have time to improve it should it be too low.
3. Making the offer to purchase
Once you’ve found your dream home, the next step to acquiring it is to sign the Offer to Purchase, an agreement between you and the seller that set out the conditions which need to be met before you can get the ball rolling. It’s very helpful to have an estate agent or attorney look over the agreement with you to ensure that you haven’t missed anything important.
Also make sure that the agreement includes a responsibility on the seller’s part to conduct a thorough home inspection for any defects, and report it to you, the buyer. The Offer to Purchase may include something known as the 72-hour clause, which just states that should the seller receive a better offer to purchase from an interested buyer, they are legally within their right to render your offer null and void and sign a deal with the new buyer.
4. The deposit
In most cases, you’ll have to make a down payment. This will usually be 10-20% of the total purchase price, but if you can go higher than that, even better. The higher your deposit, the better your chances of your loan being approved for the remainder of the purchase price, and the lower your interest rates on that loan will be.
For many first-time buyers, scraping together the funds for a deposit may be a bit difficult, especially in fragile economic times like this. Here’s the good news, many banks are offering 100% home loans to first-time home buyers. As the name suggests, this is a loan completely funded by the bank, so no deposit is needed.
5. The home loan
For many first-time home buyers, the purchase will be funded by a home loan from the bank. Applying to a bank for a home loan is probably the most important part of the process.
Just keep in mind that different banks have different lending criteria; some may approve your home loan while others won’t, and some may offer you a better interest rate than others. Therefore it’s important that you gather as much information as possible on the different lending criteria specified by different banks.
6. My home loan has been approved, so what now?
It’s a big weight off your shoulders once your home loan has been approved since you now know that you have the funds to purchase your dream home. However, it’s not the end of the home-buying process. A number of legal procedures are still required, such as bond registration and bond transfer.
This process takes roughly around 3 months from the approval of the home loan. Once it is complete, the title deed to the property will be registered in your name, although the property is still owned by the bank. Only until you’ve paid off the home loan, then it’s all yours!
Becoming a homeowner is a milestone many of us dream of. It can be a big responsibility to take upon, as well as a very rewarding one. With the right preparation, the transition from home-renter to homeowner can be a very smooth process. Speaking of, have you seen our Kloofsig development? Beautifully designed apartments for the modern adventurer who seeks both comfortable and functional living, now selling from only R822 000.
In South Africa, if you can go one day without hearing anything political, that’s called a good day. The political climate has always had a bearing on the property market. Stable governance and effective policies contribute to a positive market outlook, while uncertainties may have the opposite effect.
