While most aspects of buying a new home are exciting and adventurous, there is also a serious side to the event – dealing with the finance aspect. The sooner you address the issues and have them settled, the sooner you can relax and enjoy your viewing and making the final choice of your dream home.
Too many people find themselves not enjoying their new home simply because they did not budget properly or plan properly for home ownership. Do not spoil what should be a wonderful experience.
Consider the costs and plan your budget and you will experience pain free home ownership. Knowing what price range you will be shopping for simplifies your buying search tremendously. Below are some key issues to look at and for more in depth information, please look at the Finance section
Bond Finance Pre-Qualification
Once off costs
Other Costs
Regular monthly costs
Maintenance costs
BOND FINANCE PRE-QUALIFICATION Top
It is a good idea to let an agent help you look for financing before you find a home. The agent is in constant contact with financial institutions, and can act as invaluable "clearing house" of information. If you are actively house-hunting, but have not found the right home yet, ask the lender to do a "screening application". They will then get back to you confirming the maximum amount for which you would qualify on a bond
Knowing where you stand regarding how much money a lender will lend you (based on your income and credit rating) will put you in a good bargaining position. Sellers faced with deciding between two buyers (one of whom is "pre-qualified" by a lender) may favour the offer of the "pre-qualified" buyer, because this buyer is almost certain of getting a loan.
Today there are also many Bond Originators who will do this on your behalf and apply at more than one financial institution to get you the best deal. We will gladly put you in touch with those we work with regularly. More details available under the Finance section.
Some advice – Get your finances in order before applying. If you are on your maximum of all your credit cards, have a few small arrears or are just not in a suitable position, then rather wait. Get yourself in a firm position that will stand up to scrutiny – then apply.
ONCE OFF COSTS Top
These include :
Deposit on the home
Valuation Fees
Transfer duty
Transfer costs
Stamp duty and other sundries
Home loan registration
Municipal deposits for water and electricity
Agent commissions if the buyer is paying this
For a detailed estimation of bond repayments and associated once off costs go here.
OTHER COSTS Top
Other costs include:
Furniture removals
New curtains and carpets, etc.
Required repairs at your old home
Penalties for settlement of your previous bond
Bond Insurance – Your finance company will probably require this
REGULAR MONTHLY COSTS Top
There are also monthly costs involved in owning a home (in addition to your normal monthly expenses such as food, clothing, entertainment, transport, school fees and hire purchase).
These expenses are:
Repayment of the home loan
Insurance on the home itself
Municipal rates and refuse removal fees
Monthly levies (if you buy on Sectional Title). The levy usually covers Municipal rates, external maintenance, refuse, electricity and, in some instances, water.
Life insurance to cover the home loan
Insurance on the contents of home
REPAIR AND MAINTENANCE COSTS Top
Once off, these can vary drastically depending on the kind of improvements you intend but all costs should be taken into account. Remember that while certain changes like for instance rezoning of a large erf may seem like a quick buck there are various costs associated with this for instance “services” and the devaluation of the original property which had a large erf.
Also remember that every home has a maintenance cycle and in order to maintain your property value, you will have to undertake regular maintenance,
FINALISING YOUR BUDGET Top
Once you have ascertained what size bond you qualify for and have determined all the costs involved you are in a position to work out your budget and decide on what YOU want to spend. Although most buyers will use the maximum available to them, this does not have to be the case. Feel free to download a free budgeting sheet here.
Remember that your monthly instalments on your loan are likely to be about 25% of your income, should you take the maximum loan available to you.
Once you have decided you are ready to move ahead and begin selecting and viewing properties – fully prepared and equipped to make a quick offer to secure that special home.
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