19 November 2021

Buying your first home doesn’t need to be a stressful experience. It can be incredibly exciting if you’re properly prepared for the journey, which is why it’s best to start off with a clear idea of what you can comfortably afford on your monthly bond payments before you start searching for your dream home. Apart from your bond, there are several other costs you need to budget for such as rates & taxes, levies and transfer costs.

If you need help trying to figure out what your budget would look like as a homeowner, below is a simple guide to help you stay on track when buying your first home.

Find out what you can afford

To find out what you can afford, you can use an online affordability calculator. For a more in-depth accurate measure, consult with a bond originator from BetterBond who’ll be able to assist in determining what you can afford. Banks place a heavy reliance on creditworthiness, so an originator can pre-empt corrective measures for you to take before submitting your loan application. This will ensure that you have the best possible chance of obtaining the finance.

To increase what you could qualify for on your home finance, focus on reducing or entirely doing away with debt and store credit accounts to ensure that your credit record is favourable. Ideally, there should be no late payments reflected on your accounts and you should have some cash in the bank at the end of each month. Financial institutions will check credit records as far back as six months, so ensure that your record is clean for at least that amount of time.

Consider potential interest rate hikes

The current interest rate is at a record low which means now is the best time for you to buy a home. However, you’ll probably have to prepare for future rate hikes, so we’d recommend that you give yourself an allowance to buffer any increases. Aim for at least 1% or R100 for every R100 000 that you borrow from the bank. If you are extended to your financial limit, it’ll put you in a vulnerable position, especially if you don’t have a contingency plan.

Searching for a home you can afford

Once you know what you can afford, you’re ready to start looking for your new home. One thing you ought to consider carefully and prioritise is the location of the property. Location directly impacts the home’s potential appreciation in value, so look at the property’s proximity to amenities such as shopping malls, medical facilities, good schools, and access to major transport routes. Additional elements to look out for are any green features, such as solar installations or water savings faucets, which will reduce your monthly water and electricity bills and help keep your monthly expenses down.

Inspect the property before buying

Before signing any offer to purchase, have the property thoroughly inspected to ensure there are no major defects. Aspects to pay close attention to include the roof, load-bearing walls for structural cracks, sagging floors or ceilings and damp walls. Once you’re aware of the overall condition of the home, you’ll be able to determine whether the required repairs are manageable and within your budget.

Prepare for additional costs

Once you’ve signed all the necessary paperwork, there will be additional costs you’ll need to consider during the transfer process such as the transfer fees, registration costs and attorney fees. These costs will need to be paid early in the transfer process, so you’ll need to ensure you have the funds available. It’s also best to take into account services costs, insurance, maintenance and moving costs.

Enlist the help of a local expert

Don’t rush the home buying process, rather take your time and only buy a property when you are truly ready. If you’re feeling uneasy about taking the first step, reach out to a real estate professional who can provide you with all of the information and guidance you need to ensure the process is successful and stress-free.

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