With July’s National Savings Month well under way, it’s an inspiring time to start thinking about getting on the property ladder.
“But it is essential to make the climb in as smart a way as possible,” says Francois Venter, Director of Jawitz Properties. “Consider the following in your quest for buying your first home.”
Be practical about all your expenses
Your income is the most important factor determining the mortgage bond you qualify for. As a rule, your repayment should not be more than a third of your net income. What you may forget about including in your budget, however, is your other monthly expenses such as utilities and debit orders including paying off a car, your monthly contributions to various insurance coverage, savings accounts, or factoring in rising interest rates and inflation increases.
“You will need to be able to afford mandatory home insurance and can look at incorporating existing policies into a more affordable package that also includes protecting your home,” says Venter. “The best tip is to be conservative in your estimations – don’t spend your income to the max. You need to make allowances for unexpected expenses.”
Make use of the first-time buyer subsidy
To make your home loan more affordable, you can apply for a first time buyer grant as part of the Finance Linked Individual Subsidy Programme. Households where the gross income is between R3501 and R15 000 per month qualify for a subsidy from the government provided no other grant has been applied for or no other property is owned, and as long as you and /or your partner are at least 18 years old and are South African citizens or permanent residents.
“The aim here is to reduce the initial mortgage loan amount so that the repayments are more affordable over the period of the mortgage loan. You can get in touch with the Department of Human Settlements for more information,” says Venter.
Shop around for a home and for a bond
When choosing a property, keep in mind how the neighbourhood could change over time. “Look out for developments in the area, such as upgrades to public transport, or whether or not schools are close by. Always keep in mind the prospect of re-selling one day or the appeal of a property if you were to rent it out,” Venter adds. It’s also important to apply to as many lenders as possible for your bond. “You may be able to achieve a better rate this way, or even be offered a higher bond to cover expenses like transfer duty or initial improvements that need to be made on the property you want to purchase. But never overextend yourself.”
Get a professional inspection
Consult a property expert to inspect the property you want to buy – make sure you aren’t buying into something that could cost you even more than you thought. “Also check what the rates are and whether they are accurate for the property.”
Use winter to your advantage
Beginning your property search in winter is a good way to see what a property is like in the colder months. “Look out for leaks and assess how cold it is inside the property. Take note of how much the garden may need to be maintained – dryer months may require a lot of water to keep the grass looking good.”
A last tip is to negotiate the best price you can. “Some sellers may be open to this,” Venter concludes.