House-hunting is always stressful, and especially so for first-time buyers worried about making a mistake that could end up costing them a lot of money. However, they can easily take the strain out of the situation by following some basic guidelines, says Rudi Botha, CEO of BetterBond*, SA’s leading bond originator.
“The first and most important of these is to avoid overbuying, by consulting an originator like BetterBond and obtaining proper home loan pre-qualification before you start your home search. This will enable you to set a reasonable target price range and prevent you from wasting time on properties that are beyond your budget. It will also signal to sellers that you are a motivated buyer and ensure that they take your offer to purchase seriously.”
Next, he says, it is always a good idea to save a deposit. “Tempting as it may be to seek 100% financing, a deposit of 20% or even 10% will definitely improve your chances of being approved for a home loan – and of being able to secure an interest rate concession that will cut thousands of rands a year off your bond repayments.
“If you get a 0,5% concession on the average first-time buyer’s loan of R760 000, for example, the potential savings amount to more than R60 000 worth of interest over the 20-year lifetime of the loan, plus some R3000 a year off the monthly home loan instalments.”
Third, says Botha, first-time buyers should avoid making an offer to purchase until they have all the relevant information about the property – no matter how much pressure they get from an estate agent or the seller, or how much they fear losing out to another buyer.
“You especially need to know what it would cost you to run the property, in terms of insurance, maintenance, city council rates and service charges and any levies or special levies that apply. You also need to budget for moving costs and, if applicable, the transfer duty payable on your purchase.”
In addition, he suggests, first-time buyers should:
* Check title deeds and zonings. “You don’t want to buy a property that has all kinds of restrictions attached to it or servitudes running across it. And you don’t want to find out only after you’ve moved in that the attractive open area opposite your new home is zoned for a shopping centre or other traffic magnet.”
* Ask every question you can think of – about the condition of the property, the security of the area, the local recreation, shopping and medical facilities, the availability of public transport, and even the neighbours. “It is important to buy in the best area you can possibly afford because this will affect the price you can realise for your home when you decide to sell it – and the price you can afford for a new one as you move up the property ladder.”
* Deal only with properly qualified, experienced estate agents who are familiar with their preferred area and also willing to provide all the explanations and assurances you may need.
• Be realistic. “You shouldn’t spend too long trying to find the ‘perfect’ home that has everything on your wish-list. Be willing to compromise on the non-essentials in order to make the most of the opportunities currently presented by low house price growth and relatively easy availability of home loans.”
*BetterBond currently accounts for more than 25% of all new mortgage bonds registered in the Deeds Office annually and its statistics are a reliable indicator of the state of South Africa’s residential property market.
Source: BetterBond visit www.betterbond.co.za