When considering purchasing a property, buyers should ideally have an idea of what they can comfortably afford as a bond repayment before they take their first steps towards ownership, says Charles Haigh, Broker/Owner of RE/MAX Elite, based at the Prospur Centre in the Western Cape suburb of Plumstead.
He points out that it is important for buyers to remember that in the current market they are buying off a low interest rate base. It is for this reason that an allowance has to be made to buffer any future rate increases of at least 1% or R100 for every R100 000 that the homebuyer has borrowed from their respective lender.
Haigh notes that a buyer can speak to a mortgage originator to help them get the ball rolling and assist them to determine what amount they can afford. “Due to the fact that banks place a heavy reliance on creditworthiness, an originator can also pre-empt corrective measures for the purchaser to take before a live loan application is submitted to the banks. This will ensure that the buyer has the best possible chance of obtaining the finance when they apply,” says Haigh.
He notes that a few elements that prospective buyers can have a look at before submitting their application would be reducing or eliminating unnecessary accounts, revisiting insurance policies with little or no value and ensuring that their credit record is favourable. “It is important that the buyer’s account reflects that they have made no late payments and that they have some cash in the bank at the end of each month. The bank will go back six months and check their records, so a buyer has six months to polish their record,” Haigh explains.
Once a buyer is ready to move forward and look for a property to purchase, aspects to consider would of course be the old cliché of location. Haigh expands and says that the orientation of the property is also important with a north facing property being the better option. “Orientation will have an impact on certain elements such as the swimming pool, as it is better for a pool located on the western side of the property. Other aspects for the buyer to consider are whether there is room for improvement, extensions or renovations, as well as the home’s proximity to essential amenities like shops, transport, schools and access to major road routes,” he says. “Additional elements to look out for are pre-paid electricity meters which are good to have, along with any solar installations which will reduce the energy costs associated with running a home.”
According to Haigh a buyer should inspect the property they like thoroughly before making their final decision or signing any agreement. He says that elements to check carefully would be the roof, load bearing walls for structural cracks (which is a crack that runs on both sides of the wall with a noticeable gap, unlike hairline or plaster cracks which have little or no gap) sagging floors or ceilings and damp walls. He says that mould is not necessarily caused by rising damp and poor ventilation is often the main cause of black mould.
Adrian Goslett, CEO of RE/MAX of Southern Africa, says it is important to consider the overall condition of the home to decide whether the repairs are manageable or require major renovations. “If too much needs to be done to make the house liveable, it may be worthwhile looking elsewhere,” he says.
Haigh says that once the buyer is happy with their decision and has signed the necessary paperwork, there will be some additional costs they need to consider during the transfer process. He says that a buyer must be prepared for the bond costs and transfer costs. “Transfer duty is normally the biggest portion of the costs depending on price of the property. These costs will be called for quite soon in the transfer process. There are also attorneys’ fees, which in some cases can be negotiated. The seller appoints the transfer attorney, while the bank appoints the bond attorney,” he says.
“When a buyer moves into their new property they will have the additional cost of rates, water and electricity. Buyers should request that a reading of their water and electricity meters is taken on occupation. They should also take into account services costs, insurance, maintenance and furniture removals to name a few other expenses.”
In closing Haigh says that buyers should take their time and only buy a property when they are truly ready. He notes that buying a property is a long term investment with many advantages, but only if done in the right way.