Buying a home is often a complicated and difficult process that can be overwhelming if you do not know what to expect.
Making the decision to become a property owner is generally the easy part.
Before you even begin the hunt for a home, there are things you have to do; while you are searching for the right property, there are aspects you need to consider; and even after you sign on the dotted line, there are matters that need to be taken care of.
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Buyisile Maseko of FNB Connect outlines the steps you should take when heading on the home buying journey.
Before buying
1. Know what you want
Do some house-hunting homework first. Know what size suits your needs. Think about accessibility to work, public transport routes, schools, and shops.
2. Do your sums
Know exactly how much you can afford. It’s not just the installment you’ll be paying – you’ll need to include insurance (homeowner, household, and life cover) and municipal costs in your budget.
Insurance: Your house could be damaged by fires, flooding, a burst geyser, burst pipes, and natural disasters. Comprehensive insurance is essential because it covers damages to the property and losses. Since your home remains the security of the bank, you are required to take out adequate coverage for the duration of your home loan. This usually covers:
- The physical structure of your house, including fixtures such as swimming pools
- Damage by fire, lightning, floods, and storms
- Replacement value of the property
3. Bank on a budget
A home loan for first-time buyers can be difficult to understand, so contact your bank to do an affordability assessment to find out exactly how much credit you can access for your new home.
4. Save for and put down a deposit
You may need to put some of your own money on the table before you can buy a house. Depending on your financial situation, some mortgage products allow you to qualify for larger loans without paying a deposit.
Following the most recent interest rate hike, Jackie Smith, head of Buyers Trust, a subsidiary of ooba Group, says banks are taking a more cautious approach to lending due to the current economic climate.
A riskier lending environment means that the banks have more reason to believe that a borrower may default on their loan, making them less likely to approve a home loan of a larger size, or at all.
“We believe that this is why we’re seeing more homebuyers putting down deposits when applying for a loan.”
A deposit on a home loan can be used to both indicate your ability to save and cover future repayments, and make you less of a risk to lenders.
“The biggest factors contributing to South Africa’s riskier lending environment are centred on the current economic climate. The country is currently grappling with high levels of unemployment, reduced affordability due to high inflation, higher interest rates and reduced productivity as a result of ongoing loadshedding.”
Smith adds that statistics reveal a more cautious attitude from the banks.
“In the current environment, homebuyers need to take proactive steps to demonstrate their ability to repay their loans and practice smart financial planning, or risk having their application rejected,” says Smith.
Maseko continues her step-by-step advice:
5. Plan for additional costs
You should be aware of other once-off costs that you will have to pay, over and above the deposit. These include initiation and administration fees, legal costs, bond registration fees, VAT and transfer duty.
6. Begin the search
There are a number of factors to consider when determining the initial amount to offer on a home – the sale price of similar houses in the neighbourhood for the past year or so will give you a good estimate of current market value. The estate agent will assist you with this information.
The general condition of the house is also important. Information concerning things that need to be done in or around the building must be taken into consideration when making a price offer.
7. Know what you are buying
View as many properties as possible. Make comparisons. Make a shortlist. Sleep on the short list. Do not guess or assume anything. Ask the seller or estate agent as many questions as you can until you are totally satisfied.
Viewing the selected property several times will help you make a final decision. It is your responsibility to ensure that a prospective home will not require excessive future maintenance. You are allowed to question the reason for selling and ask about the number of other sales taking place in the area.
After buying
After finally finding the perfect home and navigating the purchase process, there are still a number of things to take care of before you move in and it can be quite overwhelming, says Cobus Odendaal, chief executive of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg.
“After all those stressful months, once you’ve signed on the dotted line and finalised the transaction, you’re looking forward to the next big step which is to move into your new home.
“However, there are still a few items to cross off on your to-do list which are essential to making a smooth transition and settling in as quickly and seamlessly as possible.”
He adds that it can be easy to overlook important tasks, so making a checklist is the best way to ensure you don’t drop any balls and add unnecessary stress to your life.
Odendaal lists the following as crucial checklist items:
- Notify work and schools
As soon as the deal is done (if not sooner) you must notify the school if you’re planning to move to a new area and you should also book sufficient time off work on both sides of moving day. Make sure all the paperwork is in order if your kids will be attending a new school.
- Plan your move and hire movers
It's important to plan your move well in advance to ensure that everything goes smoothly. This includes hiring a moving company, packing your belongings, and coordinating the move-in date with the seller or landlord.
- Update your address
Make sure to update your address with the post office, banks, credit card companies, and any other important contacts. You may also need to update your driver's license and voter registration information.
- Inspect your new home
It's important to inspect your new home before moving in to ensure that everything is in working order. This includes checking the plumbing, electrical, heating and cooling systems, and any appliances that are included in the sale. If you notice any issues, make sure to address them with your real estate agent or the seller before moving in.
- Secure homeowners insurance
Homeowners insurance is essential for protecting your investment and your personal property. It's important to shop around and compare policies to ensure that you're getting the best coverage for your investment.
- Notify your insurance company of your move
If you are securing homeowners insurance through a different company, you need to let your existing insurance company know that you – and your insured possessions – will be moving to a new address.
- Deep clean the home
Before moving in, it's a good idea to deep clean the home. This includes cleaning the floors, walls, cabinets, and appliances and, depending on the age and the state of the house, you may also want to hire a professional cleaning service to ensure that everything is thoroughly cleaned.
- Change the locks
For security reasons, it's recommended that you change the locks on your new home before moving in. This ensures that previous owners or tenants no longer have access to your home.
- Connect utilities
Before moving in, make sure to contact the utility companies to set up the necessary services such as water, electricity and internet. You may also need to set up trash and recycling services.
- Keep important documents safe
You should think about keeping documents safe as your move approaches. This includes: birth certificates, contracts and passports. The last thing you want is for critical paperwork to get lost or perhaps mistakenly thrown away in the move. It's worth considering a safe box to keep all your important documents safe.
“Finally, take some time to enjoy the fact that you are now a homeowner and look forward to being part of a new community and making new friends, exploring your new neighbourhood, and creating new memories,” Odendaal says.
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