Within the residential property market, it is largely the price of the property that influences the decision to buy or not, yet that journey really begins with the dream… the one where you imagine seeing yourself in a house, surrounded by loved ones.
For me, that dream manifested at the age of 11 when as a family, we visited friends in Pretoria. On that trip, I saw a house that I really loved, and I said to my parents:
One day I will live in a house like that.
In social conversations, what to do with a large sum of lotto winnings is a serious topical debate of fantasies and desires, and you can be guaranteed there is usually at least one person who will speak of the dream house. Yet it doesn’t have to be a dream, it can be a reality and that journey should begin before looking at house prices.
Absa’s Zydah Manuel, Portfolio for First Time Home Buyers says there are some valuable steps that should be taken if owning a house is the goal.
1. Firstly prepare your finances by reducing unnecessary expenses.
"This is something that the entire family can do to ensure everyone is a participant in the dream journey. If sacrifices need to be made, these can easily be identified when drawing up a budget. This budget must cater for your existing circumstances, and saving for a future home purchase."2. Next is to check your credit score with credit bureaux, which you are entitled to once a year for free.
"If the credit score is not up to par, you can plan to change that situation within your budget to improve the score. This is followed by a pre-qualification application for a home loan so that you have an idea of what you may qualify for, which in turn allows you to shop with confidence, and within the constraints of your budget."
3. Preparing for the associated costs to purchasing a home is also crucially important.
"There are fees related to bond initiation and registration, transfer, insurance – both building and household contents, moving and transport, rates and taxes, power and water, and in the case of sectional title, levies,” says Manuel. “This is then the moment to search for your first home, ideally on the Private Property portal.”
Let’s break this down a little further. The pre-buying preparation allows individuals to understand their affordability, which may mean trimming down the dream. But all journeys start somewhere and it will only serve to disappoint if your ‘eyes are bigger than your stomach’ so to speak. It doesn’t mean the dream is not achievable, in fact buying your first property is likely to set you on the path of buying and selling over the years until you do eventually achieve your dream.
Manuel warns that you are setting yourself up for disappointment if you skip the affordability step.
“It is not recommended to fit your budget to a property that you want especially if that is unaffordable. This can be soul-destroying. The budget and pre-qualification process, however, allows you to make a comfortable start and prepare yourself for managing homeownership.
“With a clear idea of the affordability boundaries, and when looking at properties, note that there are houses that offer more in one area than in another. The size, features, and conditions of a property and research comparisons help you to understand and manage expectations,” says Manuel.
Estate agents often talk about ‘location, location, location’, thus highlighting how important this aspect of real estate is.
But regardless of where, and how much information you can absorb online, it is important, says Manuel, to physically view a property to determine whether it needs repairs or extensions, to check its actual size in visual terms, and to determine its value in comparison to other properties in the area.
“Having an understanding of the area or suburb can really only be assessed in situ,” says Manuel. “It is recommended to visit the area both on weekends and during the week to gain a sense of traffic, noise and other activities in the suburb, inclusive of the proximity of schools, hospitals, shops and other facilities that you require in an area. And if you plan to buy into a sectional title, you’ll be able to judge how well, or not, the complex is maintained. And most recently, with remote working being favoured, you’ll be able to test wifi signal strength.”
Once you have made a decision to purchase, you should read the Offer to Purchase contract very carefully to understand your rights and obligations.
For example, once you make an offer it cannot be easily changed. “A full understanding of the agreement BEFORE signing allows you to see what the seller is legally obligated to disclose, such as known defects, and should include a requirement for a home inspection,” advises Manuel.
Assuming the contract is in order, you are able to submit a home loan application with Absa, which can be completed online with simplicity in under 15 minutes, whether it’s for a single or joint application if you are buying with a partner. If approved, Absa instructs the bond attorney to begin registration of the bond, which also includes documentation that you’ll need to read carefully before signing, and paying relevant costs or fees. The bond attorney also prepares and issues guarantees before forwarding those to the transferring attorney who begins registration at the Deeds Office.
“It can take up to 10 business days before the Deeds Office will approve the transaction, that is if there are no hiccups,” says Manuel. “If all is cleared, the bank will pay the loan amount according to guarantees issued, which is done on the day of registration.”
Once registered you and the seller will determine the moving date and so that your first dream becomes a reality.
One final note from Manuel is that it can be overwhelming when you are juggling figures and scanning the internet for sources that will help you in the pre-buying journey. “We’ve made it easy at Absa, with the provision of a number of tools that can assist.”
These are listed below and can be accessed here.
- The Absa Home Loan Estimator: A simple and quick way of determining what the bank may lend customers before they start searching for a home.
- The Absa MyHomeOwnerJourney: A free e-learning platform which can help first time home buyers understand the ins and outs of homeownership, and will answer all the pressing questions before making a decision.
- The Knowledge Hub Centre: Read more about buying a home by visiting the knowledge hub centre of articles with answers to the most frequently asked questions. www.absa.co.za/homeloans
- Bond calculator: Determine registration charges, transfer costs and attorney fees when taking out a home loan.
- Home Loans Digital Sales Platform (Home Loans DSP): This enables you to apply for a home loan online with simplicity and speed. DSP starts the process in record time, from any smart device.