What to know when you are ready to buy your dream home

• Find out how much you have on hand and how much you will be able to pay every month for the privilege of owning your own home. Contact an originator to pre-qualify you by checking your credit score and based on your affordabilty what the bank will be able to approve for in terms of a mortgage bond.
• Do not over-commit yourself! Do your homework properly on what you can afford and make sure you understand the total sum of the hidden costs. Beware of being over-confident as to how far you can stretch your budget it will cost you dearly and it is important to be realistic when you work out what your new monthly costs will be. There are many hidden costs in owning a home, make sure you know them all i.e:

  • Your bond repayment: Your big monthly expense is likely to be your monthly bond instalments, so start off by using one of the many online calculators to establish how much you will be able to borrow on a home loan without breaking your budget when it comes to the repayments. Think carefully about how happy you will be with the lifestyle you can afford after paying your bond every month.

  • Bank pre-approval: with a pre-approved bond in place, it will give you a negotiating tool when you are ready to purchase your dream home

  • Hidden costs in owning a home: annual rates and taxes, insurance, levies, home security services, garden servies, maintenance and repairs, costs linked to electricity, water, refuse removal, sewerage etc. Do not forget about the moving cost, new curtains and small costs to make the home your own.

• Find out what your transfer and registration costs are and make sure you have these funds available before subitting an offer, such as: 

  • Deposit: Most first-time buyers will need to pay at least a 5% to 10% cash deposit.

  • Bond costs: Your bond needs to be registered in the Deeds Office by the bank's attorneys. This fee is paid to the Bond Attorney to register the bond and added in this amount is the bank's initiation fee.

  • Transfer costs: The purchaser is laible to pay the transfer costs to the conveyancer who will attend to the registration of the property into your name in the Deeds Office.

  • Transfer duty: Unless there's VAT on the sale, you will have to pay the transfer duty. This is a government tax on property sales. No duty is payable on a property valued up to R1m.

• Time to find your home:

  • Make use of the services of a qualified agent with a valid Fidelity Fund Certficate
  • You need to know what you are looking for in terms of size, budget, area, lifestyle, pet friendly, work from home. Furthermore, schools, security etc
  • Think of your immediate wants and needs and longer term. A home is a long term investment and what you decide to buy will have to cater for your and your family needs for the mid- to long term future. 
  • Start with searching online and create a short list of properties you want to view. Often photos can be misleading and it very important that set ample time aside to view each property properly.
  • With Sectional Title or Development, obtain the rules as you need to know what you intend buying into. Also check the Homeowners Association or Body Corporate's finances are sound and ask if there are any special levies or other planned expenditure on the horizon (get it in writing). 
  • Plans, defects and the rest: Although the new Property Practitioner's Act requires the seller to make disclosure of any defects or deficiencies (in a written document annexed to the sale document - study it carefully!), it is still advisable to do your own homework. Ask for copies of approved building plans (check for any unlawful structures or deviations from plan), look for and ask about defects like leaking roofs, problem foundations etc - consider getting a full professional report unless you are very sure of your own abilities in this regard.
  • Make sure you have the approved plans and occupational certificate as this will delay the registration process. The bank will not allow registration to take place unless these documents are in hand.
  • Voetstoots: you as the seller has to do your own due diligence and any item that the seller needs to repair, replace, obtain has to be stipulated in the special conditions.

• Time to buy and sign the papers:

  • You have decided on the home you want to buy and it is time to sign the documents.
  • The agent will assist you to complete the offer. 
  • Make sure you understand each clause and list in the special conditions items that the seller has to repair, disclose, add or maintain prior to registration.
  • If the seller counter offer with a higher amount, it is back to the drawing baord to understand the costs. Do not make emotional decisions. If the price is too high, rather walk away and find a home that is in your affordabilty bracket.
  • Happy hunting!!