Between November 2019 and November 2020, the benchmark repo rate went from 6.75% to its current level of 3.5%, with some experts projecting further cuts. While this may seem an attractive time to jump into the property market, especially for first-time buyers, risk is a reality. Consider the following tips when embarking on the journey, especially in a time of uncertainty.
1.Expand Your Options
Remote working and tele-communing in the wake of the pandemic mean that many South Africans are no longer having to live near their workplaces. You might be one of them.
Take time to weigh other considerations apart from distance from work and traffic so you can expand your options. Should your job be more flexible than most, you can find property that better meets your social and lifestyle needs, while potentially saving you money.
2.Check your Finances
More than ever, budgeting is vital for ensuring that monthly bond commitments can be met, and with the timeframe for most Covid-19 debt relief programmes offered by financial institutions now expired, you will need to be certain that your financial situation can endure any sudden changes such as salary reductions.
Just as important as checking the availability of surplus cash for difficult months and unexpected costs, the era of Covid-19 has necessitated that you are certain that your industry or source of income is resilient enough to endure through a pandemic and potential lockdown.
3.Seek Support
In addition to Government waiving transfer duties on properties priced under R1 million, you can explore various programmes that offer support to first-time buyers. For instance, Government’s Finance Linked Individual Subsidy Programme (FLISPS) offers people with a combined household income of between R3 501 and R22 000 per month a range of subsidies.
The programme offers progressive subsidies, with people earning R3 501 a month receiving the highest subsidy of R121 626. If you previously couldn’t picture yourself owning a home, these mechanisms can help you take full advantage of the vibrant affordable home market.
4.Renegotiate
In the unfortunate event of total loss of income resulting in the inability to make repayments, consult with your financial services provider. The bank will not hastily proceed to repossess your property without engaging with you to provide the best option based on your circumstances. Repossession is the last resort, so you are encouraged to reach out to the bank if you are unable to meet your monthly obligations.
When you receive your home loan, make sure to keep up with your payments to keep a healthy credit score, catching up quickly if you have fallen behind. Furthermore, by paying a little extra each month when you have the money, you can go back to your bank and either restructure or renegotiate your bond to either shorten the loan period or adjust the payment amount to free up some cash. You have nothing to lose by having the conversation.
5.Leverage Loyalty Programmes
Traditional loyalty programmes focus solely on giving clients guaranteed rewards for spending, usually in the form of points. However, programmes are adding value by rewarding you for managing your money well, including debt management. For instance, Nedbank’s Responsible Borrower package under the Greenbacks Money Management Programme, rewards homeowners in good standing (outstanding instalments paid up for the quarter) by entering into a quarterly competition. While it is important for clients to be cognisant of the terms and conditions, the prize includes full settlement on the outstanding balance of the home loan up to the value of R1.5 million. Clients are encouraged to review the terms and conditions.
If you have made it this far and your current financial reality allows you to still afford a new home loan, acquiring one can be a great enabler to yield rewards for years to come. Nedbank offers flexible home loan options, based on the various types of purchases you could make as a homeowner or investor.
Article is written by Nedbank Home Loans