Episode 3: How much can I afford to spend on a house?

Private Property South Africa
Private Property Reporter

How to work out your affordability when buying your first home.

Presenter: Well, you know what? Over the next couple of weeks, we are tracking the journey of a first-time homeowner, and when buying a property, what does it mean to get pre-qualified? Well naturally, when you want to buy a property, you have to ask yourself what can you afford? And that will be done closely, working closely with your bank. Lephoi Mokgatle: Naturally, when looking to buy your first house, you need to ask yourself the question, how much can I afford? And choosing to work closely with your bank will help you figure that out. Finances are a critical factor when buying property. For first-time buyers embarking on this journey, who better to give a realistic view of the financial implications than Nedbank's very own experts.

Well, I'm looking at buying my very first property. Before I started my process, I worked out how much I qualified for. Why was that important?

Lephoi Mokgatle: So Brett, it's important to get an indication of how much you qualify for as well as how much as you can afford, purely because it takes away some of the anxiety when buying a home for the first time. It also allows you to make an informed decision before you go shopping for a property so that you know what kind of price range you're looking at.

What exactly do you need to find out how much you qualify for?

Lephoi Mokgatle: We would require your income, as well as your expenses. So income as far as what your salary is, any additional income that you earn every month. As far as expenses are involved, that would include how much you spend as far as your living expenses and also your contractual debt. So things like your monthly credit card installment, or your vehicle installment. You can go onto the Private Property website and get affordability calculators there, or you can go to nedbank.co.za and also find them there. And it allows you to input your income as well as your expenses, and it immediately gives you an indication of how much you can afford, based on what you've put in.

Nedbank also has an instant bond indicator, which does a necessary credit check in the background as well. And it gives you an immediate indication of how much the bank is prepared to lend you.

And when it comes to affordability, what should buyers know and consider?

Lephoi Mokgatle: Affordability is quite key because it is part of the assessment that the banks use. One of the things that works really well when trying to determine affordability as a first-time homebuyer, is to draw up a list of all the things that you spend every month. Also, draw up a list of all the income that you earn. And then once you have that monthly view, it becomes quite insightful because now you have a view of exactly how much you have left over to pay for a bond installment.

What other costs should a buyer be aware of or consider?

Lephoi Mokgatle: Brett, great question. Additional costs include things like the attorney registration fees, the bank initiation fee. Then you've got your transfer duty and a transferring attorney fee, which is also part of the transferring additional costs. There's also the ongoing costs that one needs to consider. Things like rates and taxes, levies if you're purchasing on a sectional title, water and lights, and even the moving costs. So to get a removal company to come and move your stuff into a new home can also be costly.

Throughout this whole process, I was surprised to find out how effortless it was. I could do everything online, I didn't even have to walk into a bank.

Lephoi Mokgatle: We at Nedbank have found that first-time homebuyers enjoy the online application experience because it's a 24/7 channel. You can apply anytime, anywhere. And you've got all the information available at your fingertips.

Nedbank offers a three-minute affordability and credit check that you can do on the go. Whether it be through the app, or via their website. It's quick, easy, and paperless. By completing the questions asked, you'll get an immediate indication of the loan amount they could offer, the deposit required, and the estimated monthly installment. To make sure that you're financially secure to purchase your first property, speak to your bank and make use of the many online tools at www.privateproperty.co.za.

Whether it's your first apartment in the city, a trendy suburban townhouse, or that dream family home on a gulf estate, there's a home for everyone on Private Property.

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