The roadmap Buying your first home is a big deal. There are so many things to think about and so much that you don’t know, that it can be intimidating. We’ve demystified the process and broken it down into 6 easily understandable steps to help you on your way to becoming a proud homeowner.
Getting your bucks in a row How to prepare yourself financially.
Make sure your credit history is healthy Your credit score lets banks know about how well (or badly) you manage your debt. A good credit score improves your chances of getting a home loan.
How to build up your credit score: If you don’t have one, you should apply for a credit card as this aids your score. Check your status by getting a credit report from one of the credit bureaux. Pay all your bills on time, every time. Clear as much of your debt before applying for a home loan.
Save for a deposit Having a deposit saved makes you more attractive to sellers and agents.
Why you should save for a deposit: Higher chance of getting your bond approved. Higher chance of getting your bond approved. Smaller bond, amount owed is decreased so you save on interest paid over the loan term. A deposit means your bond repayments will be lower. You’re in a better position to negotiate an interest rate since there is lower risk for the bank.
Assess your affordability Before you start looking for a property you need to have an idea of what you will be able to afford. You can use an affordability calculator to work out what size mortgage you can qualify for. The affordability calculator will consider your net income (income after tax and deductions), your total expenses, the interest rate and the bond repayment period.
Check how much you can afford with our Affordability calculator.
Beware the additional costs There are a number of additional costs that are incurred when buying and taking ownership of a house and these may come as a shock to a first-time buyer.
Have you budgeted for these? • Additional buying costs: Bond initiation fee, transfer duty, bond registration costs, conveyancing fees. • Additional home ownership costs: Bond repayments, Homeowner’s Insurance, municipal rates and taxes, water and electricity, levies (if sectional title), maintenance, security.
Get a full breakdown of the buying costs here.
Why you should get prequalified: This takes away some of the uncertainty in your home search since it gives you a good idea of what you can afford. It isn’t a guarantee that your bond will be approved but it gives you a pretty good idea. Sellers and agents see you as a serious buyer who can afford the property.
How prequalification works Getting prequalified is the same as applying for a home loan, so you would need to submit all the relevant documentation to the bank. Once your application is approved, you will receive a prequalification certificate which shows the home loan amount you have been pre-approved for.
House hunting tips Your budget – be realistic about what property you can afford.
Your needs – property is a long-term investment so consider your present and future needs.
Your lifestyle – find a neighbourhood that offers your desired lifestyle.
Property type - do you want to live in a free-standing house, flat or in a complex?
The minimum number of bedrooms and bathrooms that you need.
Do you need parking spaces and how many?
Do you need an outside area? Security – how safe is the property and area?
Cost of renovating/redecorating – how much work does the property need?
Maintenance – do you have the time to maintain the garden and pool?
Maintenance – do you have the time to maintain the garden and pool?
Proximity to schools.
Once you have a good idea of what you need, you can search through thousands of properties on Private Property to find the one that meets your needs.
Doing the deal The art of negotiating a property purchase.
Is the home’s price in line with other similar properties in the area? If the home is priced higher then you might have more room to negotiate.
How many other properties are there for sale in the area? You will be in a stronger negotiating position if there are lots of properties available than if they are scarce.
Why is the current owner selling? If the need to sell urgently then they might be willing to accept a lower offer.
How long has the property been on the market? The longer a property remains unsold the more willing a seller will be to negotiate.
Does the house need work and how much will that cost? You should factor these costs in when making an offer.
How good are your credentials as a buyer? If you don’t have to sell a property first and have a prequalified mortgage, then let the seller know as this puts you in a favourable negotiating position.
Check that the description of the property is correct (as described in the title deed).
Are all the buyers’ and sellers’ details documented clearly?
Check that the purchase price is written correctly.
Are you happy with the occupation date and occupational rent amount?
Make sure you are aware of any special conditions and the time period in which these conditions need to be fulfilled, i.e. that the agreement is subject to a grant of the buyer’s bond, or the sale of his other property.
There may be movable items that can stay with the property. Are they all listed and are the movable items which are not included in the sale, listed?
Check that the estate agent’s commission is correct (as agreed upon).
Home loan know-how What you need to get your home loan approved.
You will need these documents in order to get your home loan application processed.
If you’re employed: your latest payslip, copy of your ID, if you’re married, a copy of marriage certificate or antenuptial contract, copy of sales agreement, last 3 month’s bank statements, If the loan is over R1,5 million, a statement of your personal assets and liabilities.
If you’re self-employed: proof of income, copy of your ID, if you’re married, a copy of your marriage certificate or antenuptial contract, copy of sales agreement, last 6 month’s personal bank statements. • last 6 month’s bank statements for your business, financial statements for the last 2 years, copy of registration documents or trust deed, statement of personal assets and liabilities.
Step 1 | Apply for a home loan through a bank or bond originator.
Step 2 | Approval in principle Once your application has been assessed, you will receive an approval in principle, subject to valuation.
Step 3 | Valuation Bank evaluates the property to determine its true worth.
Step 4 | Loan is approved Once approved you receive a quotation showing approved home loan amount, interest rate and key terms and conditions.
Step 5 | Bond registration Once the quote has been accepted and signed by you, the bank will formally grant the loan and instruct the bond attorney to register the bond
More legal stuff Taking ownership of your new home.
The different attorneys involved in property transfer are:
TRANSFER ATTORNEY Handles the transfer of the property. Selected by the seller.
CANCELLATION ATTORNEY Cancels the seller’s existing bond. Selected by sellers bank.
BOND ATTORNEY Registers the new bond in the name of the buyer. Selected by buyer’s bank.
Step 1: Document assembly The conveyancing attorney receives the deed of sale and all the necessary documents required to register the transfer of the property.
Step 2: Document preparation Once the home loan has been approved, the conveyancing attorney prepares the documentation for signature by all parties. The papers that have to be signed are:
Property transfer documentation • Power of attorney – the seller needs to authorise the conveyancing lawyer to appear before the Registrar of Deeds on his/her behalf to register the transfer. Insolvency and marital declarations.
Transfer duty declaration to be sent to the Receiver of Revenue together with payment of transfer duties.
Bond documentation • Power of attorney – the purchaser needs to authorise the conveyancing lawyer to register the bond in favour of the financial institution who granted the loan.Insolvency and marital declarations. Standard documentation from the financial institution.
Step 3: Payment of conveyancing costs The conveyancing lawyer will prepare a statement of account detailing all transfer costs and bond registration costs that have to be paid.
Step 4: Documents lodged at the Deeds Office The different lawyers involved with the property must liaise with each other to ensure that all documents are lodged simultaneously at the Deeds Office.
Transfer document. • Bond registration documents. • Bond cancellation documents.
Step 5: Property is registered The conveyancer will lodge the documents that he has prepared for registration in the Deeds Office. If there is a bond to be registered the bond attorney will lodge the bond documents in the Deeds Office for registration simultaneously with the transfer documents.
The deeds office will scrutinise the documents to ensure that they comply with all relevant legislation and regulations. When they are satisfied, they inform the conveyancer that the transaction is ready for registration and thereupon, in the presence of the conveyancer and the Registrar of Deeds, the property is registered in the name of the purchaser. The bond is registered simultaneously.
Step 6: Purchase price paid to the seller The parties will be given final accounts reflecting the final adjustments on, for example, rates, levies, and occupational rent.
Step 7: Title deed released Property is now registered in the buyer’s name. All financial arrangements are usually finalised within 24 hours of registration.
Congratulations! you are now the owner of a new home
Moving Tips Taking the stress out of the big move.
Keep in contact with the seller to make sure that the agreed upon date of occupation will be respected by both parties.
Decide How You Will Move Deciding how you will move will be influenced by:
Cost - Weigh up the cost of using a removal company with the cost of doing it yourself.
Distance – if you’re moving far away, you might be better off leaving it to the pros.
Time - No one needs a long drawn out move, - you must make sure, whatever you decide, that the timing is right concerning all other parties, i.e. the seller, the buyer of your current home and so on.
Volume - The volume and size of your belongings play an important role in deciding whether you use a removal company or borrow Uncle Bob’s trailer.
Choosing a Removal Company-Speak to friends and colleagues about their moving experiences and ask for recommendations.
Shop around, Make an inventory list before you start shopping around.
Ask the following questions of the removal company
What makes your company stand out from the rest?
How many trucks do you have? How big are your trucks?
How many movers are appointed to each move?
What measures are taken to protect my furniture and appliances from being damaged?
Does your price include boxes and packaging?
Does your price include insurance?
What does the insurance cover?
Good luck with the search for your perfect home!