Buying your first home
BUYING a home can be a daunting task and for a first-time home buyer, there are many unforeseen steps and hidden costs. Being methodical and thorough in your house hunting and in the buying process could save you from making a poor investment, or over committing yourself financially.
Home loans and affordability
Saving for a home loan is the first vital step in becoming a homeowner. A deposit will be taken into consideration when calculating your affordability score, and the greater your deposit, the lower your monthly repayments will be, making your bond repayment more affordable. Before applying for a home loan, it is wise to calculate how much you can afford to pay towards monthly bond repayments. This can be done simply by using our Affordability Calculator, and a general rule is to limit your monthly instalments to less than a third of your net income.
Monthly instalments and the interest rate
Your monthly instalments are made up of the amount needed to repay the loan amount and a portion of the interest on that loan. From the moment the property is registered in your name, you are liable for these monthly payments, which will continue for the duration of the loan agreement. Interest is added to your loan amount as a lending fee, and the interest rate is based on the prime interest rate and will be specified in your loan agreement. As interest rates fluctuate over time, your monthly instalments may decrease or increase accordingly, and therefore it is a good idea to make sure you can afford such an increase should it occur.
In addition to bond repayments, home ownership comes with many expenses, and to avoid financial pressure, these should be considered at the outset. These additional costs include water and electricity charges, rates and taxes, levies for a sectional title property, and homeowners' insurance for loss or damage to your property.
The Offer to Purchase
Thorough research is essential to make a sound investment. This can be achieved through a property valuation performed by your estate agent, or you can fill out our property valuation form. With this research in hand, you can negotiate the terms of the Offer to Purchase. The Offer to Purchase contains all terms and conditions agreed upon by the buyer and seller, such as the sale being subject to bond approval or to the sale of another property within a specified period of time. It is also common for the property to be sold “voetstoots”. This means it is sold with all defects and faults, and it is therefore advisable to inspect the property carefully and negotiate any necessary repairs as part of the Offer to Purchase.Once signed by both parties, the Offer to Purchase constitutes the Deed of Sale and becomes legally binding. An attorney can assist to ensure the contract meets the necessary requirements and that the process is smooth.