While it might not be the right time for some to buy, buying property is now more affordable than it has been for a long time, thanks to a historic low in interest rates.
However, before making the decision to buy, the question is: Why do you want to buy property? Do you want to be near a school, workplace or shopping/entertainment facilities? Or do you simply need or want more space?
“Whatever your reasons, identify your needs for buying first,” says Adrian Goslett, CEO and regional director of RE/MAX Southern Africa.
He explains that “now is not a good time to buy, rather, the best time is always five years ago”. He calls this buying smart, as prices between 1995 and 2015 saw an increase, albeit, with a dip in 2008 during the global financial crisis.
“Now it has become affordable to buy property, and we are seeing a number of first-time buyers entering the market.”
What’s more, banks are granting 100% loans in some instances. As a result, many people who have been renting are now buying.
Whether you choose to buy as an individual, jointly, or as a group, Goslett has put together six simple steps to buying your first property.
1. What can I afford?
The first step, once you know your reason for buying, is knowing your budget. Bond originators, such as Betterbond, are useful to work with. They could help you to understand what your affordability score means, and to get a pre-qualification. A pre-qualification gives you an indication of what a financial institution might be prepared to lend you. For example, the lenders could say that they are prepared to give you R600 000. If the property is, for example, R650 000, you will need to pay in R50 000 once the loan has been approved. Important to understand, is that the pre-qualification does not guarantee a loan being granted.
2. The search
Now that you know what you can afford, start searching for your dream home. Conduct an online search on portals such as Private Property, Property24 and agency websites. It is a good idea to register to receive alerts when a new listing has been posted. Registering for alerts allows you to include your specifications, such as the suburb you want to live in or buy into, the type of home (for example, apartment or freehold), the number of bedrooms or bathrooms and the price range. Alternatively, you could contact an estate agent in an area or areas of your choosing and specify your requirements.
3. Use a trusted advisor
Trusted advisors (estate agents) have knowledge of the area(s) in which they work. They are able to take you to view different homes that will be closely in line with your requirements, depending on what’s on the market. During this process, you can ask questions about the homes and the area itself. Remember to be honest when giving the agent feedback about viewings. This will help to prevent the agent taking you to see similar homes with features that were not to your taste or requirements.
4. Making an offer to purchase
Take into consideration, that apart from the home loan repayment (if making use of a bank loan), there are other costs related to buying and owning property. These include transfer costs, levies or municipal rates and occupational rent. Occupational rent is payable if you want to take occupation before the property is registered. The agent will explain the terms and conditions of the offer.
5. Show me the money
The pre-qualification at step one enables you to present your offer to purchase confidently. Even if your bank has pre-qualified you, shop around for better deals. You may find that the interest rate charged could be much lower at another bank or institution. Make use of bond originators to help you compare offers – their services are free of charge.
Once the seller has accepted your offer, and the transfer of the property to your name begins, start planning your move. Make a list of what you need for your new home and the move, and tick the boxes as you go. If you choose to move into the property before the transfer process is complete, occupational rent, as spoken about in step 4, will be payable. Budget for this, as well as any other costs that you find out about.
“With information easily available on the internet, it is still important to use a trusted advisor. They will assist you to buy your first home, and buy smart”, adds Goslett.
Edited by fellow-Safrean Gudrun Kaiser.