Tips when planning to buy a house
Interest rates are at an all time low – and it is definitely a buyers’ market right now.
Buying a home can be exciting and scary all at the same time. Here are some tips when planning to buy a house that can help you in the process of buying your dream home.
Affordability is key
Be realistic about what you can afford
You must have a clear and honest snapshot of what your financial position is when considering to buy a home.
Drawing up a basic budget is key. Know exactly what your income is, but more importantly – know exactly what your expenses are. I would suggest doing a complete daily tracking system of your expenses for 3 months before applying for a home loan. From bread to milk – write down every expense daily. This will give you a good overall picture of your expenses.
Make sure that your budget does not come down to the wire when putting in a bond repayments. There should be around 10% – 15% to spare in your budget, even with a home repayment. Most property and bond origination websites calculate the average monthly bond repayment for you – and then your bank will also be able to tell you how much you can afford. Knowing what you can afford will make the process of searching for and buying a home much less stressful.
Get your existing debt under control
Try and get all your debt under control before getting into the major debt of a home loan. You won’t be getting access to a home loan if you are skipping payments on your existing debt (this will reflect negatively on your profile)
Know the costs
It’s essential to know how much you would actually have to spend if you go ahead and purchase a home. If you don’t get a 100% loan from the bank, you would have to put down a deposit, which is usually between 5% and 25% of the total purchase price (with 10% being the norm). Even if you do receive a 100% loan, you would still be responsible for paying transfer and registration fees, so it would be wise to have 10% of the purchase price in cash to afford costs not covered by your loan.
Legislation has waived the transfer duties of property under R1 million, however, registration fees still apply. Levies, property tax, municipality bills, life insurance to cover the bond and insurance for the building are all bills that you would have to foot in the long run. Remember too, that you’re now the landlord, so all maintenance, emergencies, levies and customisation fees are now your responsibility.
A bond originator
If you are not someone who is comfortable negotiating and working with finances and paperwork – and you are also unsure of the process to follow, you should perhaps consider making use of a bond originator, who will guide, assist you and deal with the bank on your behalf.
It is the wish of most to own their own home. Take control of your finances, especial your debt early on – so that when you are ready to take that step – you are in the financial position to do so.
If you feel worried about the affordability and management of your debt – please contact us and we will do free assessment to gauge if you are over-indebted, and need the services of a registered debt counsellor.