There are several advantages that buying a home has over renting, such as the sense of ownership and not needing to get permission from a landlord to do anything to the home.
Another major benefit 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. Paying money into a bond every month is a way of building equity and preparing for the future. Owning a home means that you have an asset to sell to set you up for the golden years – a luxury that those who have rented their entire lives will not enjoy.
If you want to make the most out of a property investment, the secret is to get into the market as soon as financially viable. This might mean tightening your belt initially to meet the monthly repayments, however, assuming there are no drastic changes, a 20-year bond will decrease in real terms as your income increases. The bond will become more affordable as time passes, so the earlier you get into the market, the better off you will be.
While getting ready to buy a home requires some preparation and time, the actual process can be simplified into three basic steps:
When you are ready to jump into the market, it may be tempting 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 to get pre-approval. The pre-qualification process is essentially an affordability assessment based on your earnings and credit profile. Pre-approval gives you an idea of what price bracket you can shop around in, narrowing down the search considerably and helping to reduce the risk of disappointment.
Remember to factor in all costs when determining what is affordable, such as transfer fees, attorney fees and any renovation costs if applicable. Ideally, there needs to be a little wiggle room so that you can weather an interest rate hiking cycle.
Make an offer
It is best to work with a real agent estate from a reputable brand that has extensive knowledge of the area in which you want to buy. The agent should inform you of any new stock that comes onto the market that fits your criteria. Keep in mind that the adage of location, location, location always rings true.
When you think you have struck gold and found the “one”, take a step back and get a trusted second opinion from friends and family members, who will view the home objectively. They may see things you won’t and be able to point out defects you may have missed. These aspects should be taken into consideration when making the offer.
The agent will be able to guide you through the process of making an offer and what they think the seller will accept. They will also be able to provide you with the comparative sales prices of similar homes in the area.
Apply for the bucks
Once the seller has accepted the offer, it's time to get the money in order. You can either approach the bank directly or make use of a bond originator. The service provided by the bond originator doesn’t cost you a thing. The benefit of using an origination company is that they will apply at all the banks at the same time to secure the most preferential interest rate. Provided that all paperwork is in order, you should receive an answer regarding their bond approval within a week.