If you’re serious about buying a house, you need to know the lay of the land. These are our top tips for home buyers.
Securing finance for a home isn't anywhere near as simple as it was in the old days. Banks study your financials much more carefully and go through your credit history with a fine-toothed comb. They have to ensure that they are lending responsibly and no longer simply pay lip service to ensure the buyer can afford the property in question, they check everything and want to know about all of your spending habits.
Attempting to buy an additional property for investment has also become more onerous. We recently received a call from a person who owns two investment properties and was attempting to buy a third. This particular buyer wasn't able to secure a bond from any of the banks he approached because both of his properties were housing new tenants – in this case the banks insisted that the tenants would have to have resided in the homes for at least six months before they would consider granting additional finance.
Home loan know-how
It's fair to assume that most of the bonds granted these days are thanks to bond originators. They have the know-how, they have the means and they have the contacts. They also know exactly what the banks are looking for and will request all the relevant documentation before submission. However, despite all the above there are instances where banks will reject an application outright. Here's how to up your chances of securing finance for your new home:
Don't go on a wild spending spree using your credit card in the months preceding the application. It doesn't matter if you think you will be in line for a 100 percent loan – banks take a long hard look at your credit history and may reject the submission if they believe you're stretched to the max.
Cut back on expenses. Are you paying too much for your insurance or paying for items you no longer own? Read through your policy and contact your broker to amend where necessary. Check your vehicle insurance and shop around for a cheaper option if you believe you're being charged too much.
Cut back on electricity usage as much as possible – turning off those lights and putting a timer on your geyser could end up saving R100s a month.
Limit your entertainment as much as you can – you can celebrate once you've got the finance in place.
Raising finance shouldn't be your only concern. There are numerous other important factors that come in to play when buying a home.
Check your affordability
Firstly, it's always a good idea to have a rough idea of what you can afford before you start looking at property. The Private Property website has an affordability calculator that will be able to give you an estimate (based on your salary and expenses) of the figure you’ll be looking at. Viewing property that you won't realistically be able to afford can be soul destroying and could hamper the entire house hunting exercise.
Get your timing right
We’ve all heard stories about someone who bought just at the right time and went in to make a mint when they sold the home a few months later. Indeed, this sort of thing does happen – to a lucky few, but generally speaking those who try to time the market often end up losing out on a seriously good deal because they waited too long before making an offer. Use your instincts, chat to people in the know and make an offer on a home you not only like, but know that it offers good value for money.
Location, location, location
Getting more bricks and mortar for your money isn't necessarily good in the world of property. Buying a larger home in a less desirable area has its drawbacks when it comes time to sell. Location is everything and those who perhaps bought a smaller home situated in a more desirable area will make more money in the long run.
Beware the voetstoots clause
Lastly, ensure you are making a good investment. Much has been written about selling a home voetstoots (remember the seller is generally not held responsible for latent or patent defects under the Consumer Protection Act, but that's a whole different story). While there have undoubtedly been times when a seller has been responsible for latent defects, attempting to get a sale overturned because the property is damaged in some way is going to end up being a long, costly exercise. Inspect the home thoroughly and call in the services of a home inspector if you have doubts about hidden aspects of the home.
