Buying your first home is a big deal. There are so many things to think about and so much that you don’t know, that it can be intimidating.
We’ve demystified the process and broken it down into 6 easily understandable steps to help you on your way to becoming a proud home owner.
The Road Map
Find out more about what you need to know about home loans, property search, conveyancing and more.
Here’s what you will need to do to get yourself ready to take on the financial commitment of a mortgage.
Make sure your credit history is healthy
Build up your credit score.
- If you don’t have one, you should apply for a credit card, as this aids your score.
- Check your status by getting a free credit report from one of the credit bureaus.
- Pay all your bills on time, every time.
- Clear as much of your debt before applying for a home loan.
Save for a deposit
Why you should save for a deposit.
- Higher chance of getting your bond approved.
- Smaller bond, the amount owed is decreased so you save on interest paid over the loan term.
- A deposit means your bond repayments will be lower. As a general rule, your monthly bond repayment should not exceed 30% of your gross monthly income.
- You’re in a better position to negotiate an interest rate since there is a lower risk for the bank.
Assess your affordability
Before you start looking for a property you need to have an idea of what you will be able to afford.
You can use an affordability calculator to work out what size mortgage you can qualify for.
Beware the additional costs
There are a number of additional costs that are incurred when buying and taking ownership of a house and these may come as a shock to a first time buyer.
Some things to take note of when you are house hunting include:
- Your budget – be realistic about what property you can afford.
- Your needs – property is a long-term investment. So, consider your present- and future needs.
- Your lifestyle – find a neighbourhood that offers your desired lifestyle. Is it run down or experiencing a lot of development? Is the property subject to a lot of noise?
- Security – how safe is the property? Is crime in the area under control?
- Proximity – to healthcare, schools, work and shops.
- Your space – the minimum number of bedrooms, bathrooms, parking bays and garden space that you need. What will it cost to secure your pets? Are your communication needs met? Consider all other initial costs of operating your household.
- Property type - do you want to live in a freestanding house, a flat or in a complex? Is the complex well run and maintained? How much are the Levies? What are my restrictions?
- Maintenance – do you have the time to maintain the garden and pool?
- Cost of renovating/redecorating – how much work does the property need? Can this be achieved without breaking the bank?
A quick checklist when completing an offer to purchase:
- Check that the description of the property is correct (as described in the title deed).
- Are all the buyers’ and sellers’ details documented clearly?
- Check that the purchase price is written correctly.
- Are you happy with the occupation date and occupational rent amount?
- Make sure you are aware of any special conditions and the time period in which these conditions need to be fulfilled i.e. that the agreement is subject to a grant of the buyer’s bond, or the sale of his other property.
- There may be movable items that can stay with the property. Are they all listed and are the movable items, which are not included in the sale, listed?
- Check that the estate agent’s commission is correct (as agreed upon).
The home loan application process:
- Step 1 - Submit your application: Apply for a bond through a bank or bond originator.
- Step 2 - Approval in principle: Once your application has been assessed, you will receive an approval in principle, subject to valuation.
- Step 3 - Property valuation: The bank valuates the property to determine its true worth.
- Step 4 - Loan is approved: Once approved you receive a quotation showing approved home loan amount, interest rate and key terms and conditions.
- Step 5 - Bond registration: Once the quote has been accepted and signed by you, the bank will formally grant the loan and instruct the bond attorney to register the bond.
Taking ownership of your new home. Understanding the legal aspects of registering your bond and transferring the property to your name. The three attorneys involved in transferring your new property into your name are:
- Transfer attorney: Handles the transfer of the property. Selected by the seller.
- Cancellation attorney: Cancels the seller’s existing bond. Selected by seller’s bank.
- Bond attorney: Registers the new bond in the name of the buyer. Selected by buyer’s bank.
Deciding how you will move will be influenced by:
- Cost: Weigh up the cost of using a removal company with the cost of doing it yourself.
- Distance: If you’re moving far away, you might be better off leaving it to the pros.
- Time: No one needs a long drawn out move.
- Timing: You must make sure, whatever you decide, that the timing is right concerning all other parties, i.e. the seller, the buyer of your current home, the removal company. and so on.
- Volume: The volume and size of your belongings play an important role in deciding whether you use a removal company or borrow Uncle Bob’s trailer.