A Guide to buying a House in South Africa
Steps to take
1. Setting up a Strong Foundation
We cannot emphasize enough the importance of laying a solid financial foundation before you embark on your search for a new home. Guidelines to consider:
Successful budgeting:
Carefully assess your income and expenses to determine a comfortable monthly bond repayment amount. Factor in additional ownership costs like rates, taxes, and levies, as well as moving expenses and potential maintenance needs and the “hidden” legal costs that apply when you buy a home
Successful saving:
Don't underestimate the power of a deposit. Even a small down payment can significantly reduce your loan amount, potentially lowering your interest rate and saving you money in the long run. Though some lenders do offer 100% bonds, we recommend delaying your purchase until you have managed to save for a down payment. A deposit demonstrates your commitment to the purchase and can reduce your repayments significantly.
Understanding Bank Assessments:
When you apply for a loan, the banks will meticulously analyze your financial health before approving a bond.
Make sure you also get the following in place while you save that deposit:
Job Security and Income Stability:
Consistent employment with a healthy track record strengthens your application. Freelancers and self-employed individuals may need to provide additional documentation to demonstrate stable income.
Management of funds:
Banks look for responsible money management. Evidence of regular savings demonstrates your ability to manage finances effectively.
Management of debt:
Maintain a good credit score by paying bills on time and avoiding excessive debt.
2. Doing a pre-qualification first
Pre-qualification is key. A bond originator will assess your financial profile and pre-qualify you for a specific loan amount. This strengthens your negotiating position when making offers and demonstrates to sellers that you're a serious buyer.
Your bond originator will negotiate with various lenders on your behalf, ensuring you secure the most favorable interest rate and loan terms. They will guide you through the implications of potential interest rate hikes, give you an understanding of the different loan products you qualify for, and ensure you secure the most favorable financing option.
3. Finding your dream home
Now that you're financially prepared, it's time to find your dream home! Work with a reputable real estate agent to ensure you get the best advice. At KZN Property Group we understand the significance of finding the perfect space to live, work and thrive. Our agents have access to cutting-edge technology that streamlines the whole process, as well as a wealth of experience and knowledge. Plus, our extensive network of partners, including attorneys, conveyancers, and bond originators, ensures your buying experience is less stressful.
Whichever agency you choose, leverage their expertise as you explore neighborhoods that resonate with you. You’ll also need to decide whether you’re looking for a sectional title or freehold.
Sectional Title (for example, an apartment) is ideal for low maintenance living with shared amenities. It’s generally easier to secure financing for but you'll be subject to body-corporate rules and levies.
Freehold offers greater independence and the potential for future expansion. However, maintenance of the home and the entire property falls squarely on the homeowner.
When evaluating a property, consider:
Growth Potential:
Research areas with a history of property value appreciation. This ensures your investment grows over time. Security impacts growth potential significantly, so find out about the crime rate in the areas you’re considering.
Long-Term Needs:
Think about your future plans. If you plan to start a family, a freehold property may offer more space for expansion compared to a sectional title unit. Moving is stressful and costly. Planning for your long-term needs will avoid unnecessary expenses in the future.
4. Negotiating and Securing Your Dream Home
Once you’ve found the perfect property, don't let emotions cloud your judgment. Ideally, get a qualified professional to inspect the property for structural integrity, electrical and plumbing issues, and potential problems like pests.
If the inspection gives you the green light, ask to see the title deeds of the property. Ensure there are no restrictive clauses or limitations and that all additions to the property have been undertaken with building approvals in place.
If you’re ready to make an offer, your property practitioner will guide you through the process, helping you determine a competitive price and adding any contingencies you wish to include in the agreement (these may include repairs). They'll then present your offer to the seller's agent. Negotiation is fairly common practice, so be prepared to engage in a bit of back-and-forth until a mutually agreeable price is reached.
5. Closing the Deal