Buying your own home can be a daunting prospect. Many of us have spent our lives renting, so when we decide to take the step up to owning property we often aren’t quite as prepared as we should be. With this in mind we sat down with Meyer de Waal, owner of My Bond Fitness and a conveyancing lawyer for over 28 years, to figure out exactly what a first time home buyer should know before signing on the dotted line.
Become an Expert
The first thing many of us do before we buy a new mobile phone, TV or even a pair of running shoes is we research. We look up the product online, compare specs and read countless reviews before finally making our decision. You would think most of us would do that on the biggest purchase of our lives – a house. The thing is, we don’t.
Meyer suggests that not only should you research the housing market extensively, comparing properties in your desired locations, but also get a Comparative Markey Analysis (CMA) to compare the price you are being asked to pay with other prices in that neighbourhood. More often than not the estate agent involved will offer you a 1-piece brochure with information on the property – don’t be afraid to request more! Buying a house is a 20-year commitment and one that should not be entered into lightly!
Check You Credit Score
The major stumbling block in most property sales is financing, with only 1 in 4 home loans being approved. What many of us don’t realise is the importance our Credit Score plays in this decision. Your credit score will determine the rating the bank and other financial institutions give you after examining how you have handled credit in the past. If you have a “thin” profile and little or no debt , it generally means you have little information the bank can analyse and you may find it strange that the bank may request that you first open a store account to establish a credit profile and then come back to them
If you’re in the market for a new home, check out how much you could qualify at My Bond Fitness. By knowing your credit score, you have the chance to improve it over time. This could potentially save you up to 30% on your bond payments.
After you have found out your credit score, you can check your affordability. This takes into account your income and expenses, working out the size of the loan you could potentially get from the bank. Knowing how much you could possibly borrow makes the entire process far simpler. “Most agents will show a client several houses before they decide on the one they really like,” Meyer explained. “After the potential owner has decided, the agent goes about running all the necessary checks, including their credit record and what they could possibly afford. By knowing exactly what you can afford before beginning your search you not only remove the risk of falling in love with a house you can’t afford but also improves the chance your agent can find you one you will like in your price range.”
Budget Before You Buy
As simple as this may sound it can truly save you in the long run. When thinking of buying a home take an honest look at your finances. Replace your monthly rent with the potential bond repayments, as well as costs like house insurance, rates and taxes, levies and property maintenance. All these costs add up and could put a strain on your monthly income.
Budgeting for other costs like the bond registration fee and transfer costs can also spiral out of control. Use something like Avid Firefly, an application that works out the possible costs involved in the purchase of your home.
There are also plenty of personal budget apps out there, like Mobile2Budget, which make controlling your finances so much simpler. Try one out for a few months to see exactly where your money is being spent!
Working Hard For Your Money
Getting a home loan is a difficult business and can be made even more difficult depending on how you’re employed. A full-time employee with a constant paycheque is a far more attractive prospect for any lending agent than someone who is self-employed or commission-based.
If you are self-employed or work for commission contact a home loan consultant before you consider buying. There might be some serious red-tape you need to get around and the last thing you want to do is lose out on your dream home because of delays with your bond approval.
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