“While the information isn’t secret, many first-time buyers still find themselves overwhelmed when purchasing their first home. With this how-to guide we hope to alleviate concerns and shed light on the process.” — Mike Greeff, CEO, Greeff Christie’s International Real Estate
Without a doubt, gearing up to purchase your first property is one of the most exciting — not to mention daunting — events you’ll experience in your life. The fact that many people never buy and spend their lives renting puts into sharp focus just how momentous this decision is. You’ll be one of a lucky few, which gives you all the more reason to celebrate when your bond finally goes through!
But as with all life-changing decisions, there are many factors to consider and a few pitfalls to navigate along the way. Luckily, we’re here to help:
Be honest with yourself
First and foremost, you need to do a harsh, honest audit of your financial situation to work out how much you can really afford. This includes your lifestyle budget, debit orders and savings, as well as the deposit you intend to put down to secure the property. It’s tough, but being scrupulous in this phase will go a long way towards ensuring you don’t run into repayment trouble down the line.
For an accurate idea of what you qualify for, it’s best to make use of an affordability calculator, like this one.
Next, decide on the strategy for the property:
How long do you intend to pay it off for?
- Will you pay extra into the bond on a monthly basis to reduce both the repayment costs and bond length?
- Do you see your first property as a ‘foot-in-the-door’ type of purchase, and one you’ll be ‘flipping’ in the near future?
- If you said ‘yes’ to the above, then it’s a good idea to start factoring in renovation and modernisation costs now
Once you’ve got a solid budget and strategy in place, start the bond origination process to avoid disappointment. Pre-approval helps ensure cash buyers don’t get first priority, while also serving as validation that you’ve got the funds to backup your offer. Once complete, it’s time for the exciting part: looking for the property that ticks all the budgetary boxes and delights you from the very beginning.
Let’s quickly fast forward...
You’ve found the perfect property… now what?
The place immediately jumped out at you online and you requested a viewing which subsequently confirmed your hopes: ‘Yes, this is the one! This is the property for me!’
So how do you go about securing the spot? Firstly, you need to figure out the deposit amount you want to put down. It varies from sale to sale — sometimes the deposit may be a requirement with an agreed upon number attached to it, and other times the seller may give you a bit more leeway. In addition, your bond might be approved to cover 100% of the property, which affords you more freedom. Bear in mind, however, that the number you decide on needs to be in line with how affordable your monthly repayments are.
Submit your offer to purchase
Deep breaths! You’re nearly there. Once you’ve decided on all of the above, submit your offer to purchase the property to the agent. You now have 30 days to get your bond approved, but due to your proactiveness you’re already in possession of a pre-approval loan.
Once the offer is accepted by the seller and the documents are signed, the legal process begins. The legalities can take up to three months to complete, with two considerable fees rearing their — unforeseen, to some — heads during this phase:
- Transfer fees are levied to transfer the property from the seller’s name into the buyer’s name. If a property is below R900 000, you may not have to pay transfer duty here.
- Bond registration fees are payable to the bond attorney for the Title Deed transfer and registration of the new property into your name.
To calculate the cost of the above fees, use a transfer calculator. Or if you’d like to learn more about this step of the purchase process, follow this link for the services of our exemplary legal partners, STBB.
Once the transfer has gone through, you will be the proud owner of your first property. Congratulations! But before you go, we’ve got two tips to make the process even smoother for you:
- Occupational rent. If you move in to the property before it’s been transferred or registered, you will be required to pay occupational rent before bond repayments begin. This can put extra financial pressure on you in an already stressful situation. If you are looking to save, consider staying where you are until the repayments begin to avoid occupational rent.
- Put in more (but only if you can). Try pay a little extra into your bond, over-and-above your monthly repayments. This decreases the amount and length-of-time of your bond repayments overall.
Greeff Christie’s International Real Estate is passionate about all things property, and our commitment to securing you the home you’ve always dreamed of is testament to that drive. Should you require any assistance, please don’t hesitate to contact an agent closest to you: www.greeff.co.za/contact
To see what properties are currently on the market, head over to our website. Happy hunting!