Buying or selling a home as well as moving, can be one of the most stressful experiences in your life, even more so if you are not properly informed, and it is probably one of the most important investments you will make. You need to understand your rights & obligations and learn to take control of the process.
There is so much to be said about buying property in South Africa, but a good place to start is probably:
The basic steps that first-time home buyers should know about:
Start saving for a deposit and registration & transfer costs. The banks have all changed their home loan lending policies. No longer can you obtain a bond for 108% of the property value. In fact, in certain instances, you may only qualify for 60% of the purchase price and the rest (including the bond costs) will have to be paid out of your pocket.
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 bureaus 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 them, 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 paying back the home loan. If you suffered unexpected circumstances that were out of the ordinary, like a loss of a job or extensive medical bills, let them 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 won’t hurt to just make a phone call to SARS, to check whether all your tax-affairs are up to date. Your new property will not register in your name if you have any 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 the location in terms of traveling distance to work, schools, and so on.
- Enquire about affordability of the schools, rates & taxes, levies and other expenses/facilities in the area.
While house-hunting ask the estate agent and 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.
Our Advice to You…
Although buying and selling property is not an exact science and circumstances will vary from transaction to transaction, we have some simple tips that we would like to share with you:
- Learn to trust your instincts. Do not believe that everybody has your best interests at heart. Remember that buying and selling property is a commercial transaction and therefore you need to be involved with the management of the whole process.
- Do not buy in haste. Spend time thinking about the property. We firmly believe that if the property is meant for you, it will still be available tomorrow.
- Why pay off someone else’s bond by renting, when you can grow your own capital wealth by owning your own property? (You may be renting for good reasons however.)
- Never start renovating or improving your new home before registration of transfer has gone through and you are legally the owner. The transaction can collapse prior to registration of transfer.
- Never over capitalize on your property. Before improving, it is wise to determine whether or not you will be able to make your money back when you sell the property. Do some research in the area and find out what the market value of other properties is.
- Do not use all of your life savings to buy your home. Keep some money available for emergencies.
- Finally, you need to aim to retire bond-free and debt-free!
This article was kindly written for Phuthu.co.za readers by Property Power Magazine: