Wanting to buy a home next year? Then now’s the time to start making plans.
The December holiday is traditionally a long one, with many businesses shutting their doors for a few weeks. This means employees are on leave – a perfect time to start exploring the housing market more deeply and forgetting your financial affairs in order.
A property purchase should never be rushed and anyone buying a home should not only get a clear idea of the average price of property in their area of choice, they should also double check to ensure that the neighbourhood is a good one. In-depth research takes time and the holiday season is ideal for taking a serious look at what’s available and making enquiries as to how much the banks will lend.
Check your credit score
One of the first things a potential buyer should do is to check their credit score to ensure that, metaphorically speaking, their noses are clean before asking the banks to consider a loan application. It’s a quick and simple exercise and given that South Africans are entitled to one free report annually, shouldn’t cost a penny.
Get your debt under control
Keep an eye on your debt levels and reduce these wherever possible. Now is not the time to be taking on more credit so it’s advisable to avoid buying large ticket items and/or applying for a new credit card. Likewise, it’s not the time to be looking for a new job. Banks like stability and could turn down an application if they believe the applicant doesn’t have the required job security.
Build up your deposit
Save as much as you can. Strangely enough, many view deposits as a form of punishment. However, what needs to be remembered is that the more you put in to the bond, the less you will be paying back. Try to put as much money into the bond as possible and don’t buy the most expensive property you can find, even if the bank is willing to lend you the money.
Get Christmas cash
Forgo Christmas presents and ask family members for cash instead. There’s a lot more to buying a home than simply securing a bond. Various things including transfer fees, conveyancing costs and expenses linked to the move all need to be factored into the equation, so the more cash you have available the better.
Find the right estate agent to work with
Choose your estate agent with care. Ask friends and family for recommendations and if that’s not possible, make very sure your agent of choice has a valid Fidelity Fund certificate. Chat to the agent to ascertain how well they know the area and how much stock they have on their books. Buyers need to feel comfortable with their agent and shouldn’t work with someone who they feel will push them into buying something they don’t really want.
Agents need to listen to their clients carefully in order not to waste their time by showing them unsuitable homes. Some buyers feel guilty when they reject property after property - don’t, and if an agent insists on showing you unsuitable properties or those out of your price range time after time, find another who will do the job to your satisfaction. Ask the agent to give you a rough idea as to how much the banks could be willing to lend, based on your earnings and expenses. Remember that this figure won’t guarantee that you will be able to purchase for that sum, but it will be a good guideline as to how much you can afford.
Shop around for the best mortgage
Use a mortgage originator. The days of automatically using the bank where your accounts are held are well and truly over. A mortgage originator will apply to all the major banks on your behalf and will find the best interest rate possible.
Don’t ever allow yourself to be pushed into a property deal. Bide your time if you can’t find what you are looking for. Remember there’s a strong possibility that the home you eventually buy won’t tick all the right boxes (most of us have unrealistic expectations when it comes to property) but if the home suits your needs and is well priced, consider putting in an offer sooner rather than later.
[Source Private Property - Lea Jacobs - 13/11/2017]