BUYING AND OWNING YOUR OWN HOME…… What should I know?
A few years ago, I walked into a client’s office, on his wall, was a framed saying: “God makes more people, but He does not make more land” – Author Unknown.
Being the ultimate inquisitive young agent, I asked this well-established business man why out of all the motivational sayings that could inspire, did he have this one on his wall? He looked up at me, and with a calm and cool voice he responded: “These are the words my dad lived by. He taught me that if you want to experience true wealth and financial freedom, own your own home and invest in property — it has limited availability, it is the definition of wealth and can offer you a passive income.”
Fast forward a few years, now a little bit more seasoned within the real estate environment, I contemplate what I have learnt. Well, I can say without a doubt – the quality of life experienced by people who own their own homes and have invested in property, is far more relaxed than people that are life tenants.
Owning your own home can seem nearly impossible at today’s prices and the costs involved in purchasing a property. So, here are some top tips if you are considering buying:
The Financial Aspect:
- Get Qualified: most banks have consultants; alternatively contact a bond origination company so that you can see which bank will offer you the best deal. Contact them so that you can get an idea of what a bank will be prepared to loan you.
- Build a credit history: When banks consider giving you a home loan, they will want a credit history so that they can see how you handle your accounts. This can be done through credit cards, vehicle loans or store cards. Please ensure that when having these accounts – they are managed and paid on time. (Be careful not to get over-indebted as this will have a direct effect on your affordability and ultimately what you can qualify for.)
- Build up your savings – Ensure that a portion of your salary is paid into a savings account with a higher interest. Preferably something that will not allow you to access your savings easily – so that you can avoid expensive luxury items. A good start is to put away what you will be spending on your bond. This will help improve your discipline.
- Deposits – A bank will assess your risk profile and the formula is simple: the higher the risk, the higher the interest charged on your home loan. The higher the deposit, the lower the interest rate. A 10 to 20% deposit can have an impact on the interest charged.
- Transfer and bond costs — When purchasing a property, there are transfer and bond costs. Know what you will need so that you can make provision within your budget.
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- Once your mortgage has been approved and you have bought your home, always pay a little extra on your bond. This will result in a saving in interest. (Ensure that you register an access bond so that you can use it as a savings account.)
Choosing your Dream Home:
- Decide where you want to live and what kind of accommodation you will require. Be cognoscente of your current needs, but also take into account your future lifestyle.
TOP TIP: Prices of property continue to grow over a period of years — stretch yourself now and sacrifice that expensive car or the overseas vacation. In the long term buying a more expensive property will result in not having to sell and buy again. You will also avoid paying more for the property that you can buy today at a cheaper price.
- Compare prices and know what the recent sales are in an area. Ask your agent for a Lightstone or CMA report so that you can see what the recent sales are in the area. Compare similar properties on the market. This will help in deciding what offer to make once you find the property that you want.
- Obtain a condition report on the property from the owner. Once you have decided on the property you want, request a second viewing. Take a slow walk through the property and be sure that you don’t see anything that could spell danger. It is always a good idea to ask for an inspection of the property, although this can be quite expensive. It will definitely help with peace of mind when making such a huge investment.
- Fixtures and fittings – Ensure that the agent supplies you with a thorough list of the fixtures and fittings. Pay particular attention to loose items such as pot plants, mirrors and bar chairs. Be sure that everything that stays or goes, forms part of the agreement. This is also true for any “improvements” that the Seller undertakes to complete before transfer.
- Request a copy of the title deed — this will give a clear indication of restrictions to the property
- Request a copy of the plans — ensure that the owner commits in writing that there are approved plans for the property. (You don’t want to remove a feature of the property if it is not on plan.)
In closing, I know that there are lot of “disruptors” in the market that allow Buyers to connect with Sellers. A note to remember, is that Agencies and their Agents have a fiduciary responsibility to protect both the Sellers and Buyers. You can have a level of trust that you are protected through the EAAB and that should anything go wrong, a buyer will have recourse. There is also the reputation of the agent. Most successful agents will not compromise their reputation for a quick sale.
Should you require more information or if you require some advice, don’t hesitate to contact us at 0861-007-671 or at in**@re*********.za
Author: Foti Sousalis
Group Director | Realty Atlas Property Group