select
|

Launching the home buying process

There are few events in life that have the same profound impact as buying a home. Purchasing a property is a milestone in life that most aim for and many regard as a coming-of-age event and status symbol. 

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that buying a home has several advantages over renting, such as the sense of ownership and not needing to get permission from the landlord to do anything to the home.

“Another major advantage to buying a home instead of renting one is that owning a property is in fact a kind of forced saving. The reality is that most South Africans do not save enough money for their retirement. The country’s current household saving rate is around 16%, which is relatively low when compared to other emerging markets. Paying money into a bond every month is a way of building equity and putting money away for the future. A homeowner will be able to sell the home that they have paid off over 20 years and downsize. This will offer welcomed financial relief when it is needed most. South African’s that have rented for their entire lives will have no asset to sell,” says Goslett.

In order to make the most out of the property investment, the secret is to get into the market as soon as financially viable, advises Goslett. “Although it may require the buyer to initially tighten their belt to meet the monthly repayments, assuming there are no drastic changes, a 20-year bond will decrease in real terms as the buyer’s salary increases. This will make the bond more affordable as time passes. Essentially, the earlier a buyer gets into the market, the better off they will be,” he says.

Goslett notes that while getting ready to purchase a home requires some preparation and can take some time, the actual process of buying a property can be simplified into three basic steps:

Get pre-approved

Once a prospective buyer is ready to get into the property market, they may be tempted to hit the show houses as soon as possible. However it is best to start by paying a visit to the bank or a bond origination company such as the Betterlife Group to see how much you qualify for.  The pre-qualification process is essentially an affordability assessment based on the buyer’s earnings and credit profile. This will provide the buyer with a predetermined amount that they will qualify for when applying for a bond. Getting pre-approved gives the buyer an idea of what price bracket they can shop around in, narrowing down the search considerably and helping to reduce the risk of disappointment.

It is important to factor in all costs when determining what is affordable, such as transfer fees, attorney fees and any renovation costs if applicable. It is also advisable to consider that South Africa is currently in an interest rate hiking cycle. Should rates increase, it is vital that the buyer can still comfortably afford the home.

Making an offer

Buyers should work with a real agent estate from a reputable brand that has extensive knowledge of the area in which they would like to purchase. Working closely with an agent will ensure that the buyer is informed of any new stock that comes onto the market as it becomes available. It is vital that buyers bear in mind the old adage of location, location, location when looking for their ideal home.

Goslett says that once a buyer has found what they think is the right home, they should get a trusted second opinion from friends and family members, who will look at the property with an objective view and possibly point out any defects that the buyer may have initially missed. These aspects should be taken into consideration when making the offer.

The real estate agent will be able to provide guidance to the buyer regarding what offering price would be acceptable to the seller. The agent will also be able to provide the buyer with comparative pricing of what other similar homes in the areas have recently sold for.

Apply for a bond

Once the offer has been accepted by the seller, the next step is to approach the bank for a bond. Goslett says that buyers can either approach the bank themselves or make use of a bond originator. The service provided by the bond originator is at no cost to the buyer. The benefit of using an origination company is that they will apply at all the banks at the same time in order to secure the most preferential interest rate. Provided that all paperwork is in order, the buyer should receive an answer regarding their bond approval within a week.

According to Goslett, while it might be tempting to look at a 30-year bond option because of the lower monthly repayments, the interest amount paid on the bond over the longer term of the loan will be significantly higher.

“Taking the necessary steps to purchase a property will provide the homeowner with an asset in their name that can provide them with good returns on investment over the long term,” Goslett concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Jan 2018
      Many people only start thinking about home-ownership when they are ready to “settle down” or start a family, which is why first-time buyers these days are generally in their mid-30s, compared to those in the previous generation who were usually in their mid-20s.
    • 22 Jan 2018
      Moving away from the city to a country or coastal town and a slower-paced life is a frequent new-year resolution for South Africans, but thorough research should be done before you break free from the hustle and bustle, because making the wrong move could turn out to be a very expensive mistake, and even more stressful for you and your family than staying in the “big smoke”.
    • 22 Jan 2018
      Cape Town is home to many breathtaking and historic homes, but House Invermark designed in 1969 by South African architect Gilbert Colyn, with inspiration from two modernist icons: the Glass House by Phillip Johnson and Farnsworth House by Ludwig Mies van der Rohe is in a class of its own.
    • 22 Jan 2018
      2017 was a challenging year for the South African property market in general, despite small pockets of thriving activity in areas like the Western Cape. As we head into 2018, Tony Clarke, Managing Director of the Rawson Property Group, casts his eye forward to property trends and market influences that could make their impact felt in the New Year.
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK