Getting started - essential tips for first time property buyers

The current lending climate is tough for first time buyers particularly with the stringent National Credit Act requirements and the worldwide recession affecting banks and how strict they are when it comes to approving home loans.

However, there are some tips first time buyers can follow to make the process of applying for a home loan, and ultimately owning their desired property a little easier, says Francois Venter, Director of Jawitz Properties.

“Before you even begin house hunting, the first step is to establish what home loan amount you can afford.” The National Credit Act calls for banks to review an applicant’s gross income thoroughly, 30% of which is generally allocated to cover home loan repayments, while also considering monthly expenses such as groceries, personal loans, current rent, utilities, school fees, and even entertainment and clothing expenses, among other items.

“The banks have to be sure you can afford to pay back your minimum repayments on the amount they lend you, while maintaining a realistic lifestyle,” says Venter.

To calculate the size of the bond you can afford, visit the websites of bond originators or banks as many have bond calculators that are easy to use.

Another step in the right direction is to do your best to keep a clean credit history as this will count in your favour. The banks will look into your credit payment history and it may count against you if you have defaulted on a debt or are in arrears with any of your repayments,” says Venter.

If you can afford to put down a deposit, that will also really help in securing your dream property. Venter says that statistics indicate that buyers who are able to put down a deposit are more likely to get their bonds approved and may even get a more favourable lending rate which can mean less interest to be paid over the bond term. “Sellers are also more inclined to accept an offer if a buyer has a deposit,” says Venter.

The process of applying for a home loan can be tedious so Venter recommends first time buyers seek the assistance of a bond originator once finding a property they want to buy. “These are professionals who know exactly what the banks are looking for, can assist with all the paperwork and ultimately negotiate the best deal should your bond application be approved.”

A bond originator will assist in approaching as many banks as possible for consideration and will require a number of  items to get the process started including three months of payslips and bank statements, a detailed income and expenditure statement, a statement of your assets and liabilities and a copy of your ID.  If you’re self-employed the requirements are more onerous and include two years of financial statements, cash flow forecast, and a personal statement of assets and liabilities, as well as the submission of forms such as an IT34 notice which indicates how much is owed to or by SARS.

“Keep in mind that if your bond is approved you will have other expenses to consider such as bond registration and the transfer costs of getting the property into your name, as well as paying any attorneys who have been involved in the transaction. It would be wise to either include the additional costs in your bond application, or to make provision for these costs in your budget. The additional costs you will pay will depend on the total amount of your bond plus administration fees,” Venter concludes.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
    • 16 Jan 2018
      The start of the new year is symbolic of new beginnings. A good time to take stock of one’s possessions as well as how necessary they actually are. However, seeing as the process may appear daunting – a plan goes a long way.
    • 16 Jan 2018
      The Western Cape is still in the throes of a severe drought and many households have to adjust the way they use and save water. It is a little more complicated in sectional title schemes, however, as it is not that easy to implement grey water systems for multiple users and it is also difficult to monitor water usage accurately if there are no separate water meters
    • 15 Jan 2018
      In ideal rental situations, when a lease is signed the tenant will stay for the full duration of his lease without any complications and the landlord will uphold his obligations, creating a win-win situation for tenant and landlord.
    • 15 Jan 2018
      The Atlantic Seaboard’s housing market has stoically withstood the brunt of the growing economic and political instability, consistently achieving double digit growth way above the national average, however, in 2017 South Africa’s most resilient market finally began to yield to the pressure.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us