Besides the braais, the office parties, and the breakaways to the beach or the bushveld, the summer holiday period is always a good time to take stock and plan for the year to come.
And if it’s property you’re wanting to buy – either as a first time buyer or because you’re looking to expand your portfolio of investments – it’s a perfect time to design your strategy.
“It’s no secret that financial institutions have fairly stringent lending requirements, and it’s become increasingly more important for prospective homeowners to keep their financial affairs in order to show the necessary affordability ratios,” said Adrian Goslett, CEO of RE/MAX of Southern Africa.
“This also applies to current homeowners who might require additional finances to undertake renovation projects or upgrades to their properties.”
He said that it makes sense to take time out to step back and assess your financial situation, to plan your actions, and to measure the progress you’re making towards attaining your financial objectives.
First-time buyers
For first time buyers and people who don’t have much experience of the property market, though, knowing what you need to know can be a bit of a conundrum.
“This is where we can help,” said Linda Rall, provincial sales manager for the Eastern Cape and Garden Route region for ooba, which, as MortgageSA, pioneered the concept of bond origination in South Africa. (Private Property reported in March that ooba’s record for bond approvals stood at over 68.7% at the start of 2014.)
The process of applying for a bond isn’t a straight-forward one, so it makes sense to use bond originators – especially since they’ll apply to all the banks on your behalf (and you won’t be obliged to accept any of the banks’ deals, either).
Get pre-qualified for finance
“The best way to begin – and this is where planning makes sense – is to get pre-qualified for bond finance” said Linda.
“This will help you establish affordability in terms of the National Credit Act, will provide you with an amount that you’re likely to purchase for, and will also give you an insight into your credit ability.
“A pre-qualification will give you an understanding of your potential risk profile. If this requires work in order to improve your risk rating and thus your chances of obtaining a bond, we’ll be able to counsel and guide you as to what you can do to achieve a better risk status.
“If you’re self-employed, you’ll be informed of what documentation to prepare, and you’ll be guided through the processes that the banks will follow when assessing your ability to obtain a home loan.”
Linda said that as a first time buyer you should save up for a deposit – “because even though the banks say they’ll provide 100% bonds, those bonds come at a cost. But with a deposit, you’re in a good position to negotiate a lower interest rate.”
Like Adrian, Linda believes that now is a good time to plan your strategy – “so that you're ready to mobilise your funding in the new year.”
Financial plan
Adrian pointed out that the purchase of property shouldn’t be the only aspect of your financial plan for the new year. Now is the time to measure the performance of your investment portfolio, which, he said, is typically measured by several different benchmarks – although, the most important of them is the one you set yourself.
“Assessing your financial position and making the required changes is not something to put off,” he said.
“It’s vital that consumers know what they’re spending their money on and how to implement the necessary changes to their financial plan to achieve their homeownership goals.
“Take time to examine your financial and life goals in order to determine the course you need to follow to attain these objectives.
“Review changes that have occurred, and anticipate changes that may occur in the future.
“With the correct planning, nothing is out of reach,” he said.