Lay the Right Foundations
Give yourself six months to a year before you start visiting show houses. Study the property pages and agents’ websites to get a good idea of value in the different areas. While you are doing this, put everything you can into saving up an amount equivalent to at least three months’ worth of living expenses. Rainy days happen and once you’ve got a bond to pay, you don’t want the security of your home under threat.
Cut your Coat According to your Cloth…
Set your budget and try to find a house below that. Do not stretch. “Rather start with a fixer-upper that allows you to pay off your bond faster, or that you can sell for a profit,” says Paul Stevens, CEO of Just Property. “You don’t want to get yourself into difficulties and have to cut back on living the life you imagined in your new home. The rule of thumb is to spend no more than a third of your income on housing.”
Do your calculations based on putting down a 20% deposit, if at all possible. This reduces your risk and your repayments, and makes getting a loan easier. If you can’t afford a 20% deposit, lower your offer or look for a cheaper option. Rather work your way up to that sprawling Edwardian with the rolling lawns or the contemporary apartment with the exquisite kitchen.
If you don’t over-reach, you’ll be able to pay off your starter home and live a full and interesting life with none of the terrible angst of being in over your head. Stevens agrees: “It’s not easy to save a 20% deposit, but it will make you wealthy in more ways than one.”
Manage your Risico
You’ve set your budget, now go and get a pre-approved bond, and don’t be too intimidated to shop around.
“A preapproved mortgage will definitely give you leverage in your negotiations with sellers,” says Stevens. You’ll have to present your expenses and go through your budget again, but much better to do this before your fall in love with a home than to find out after you’ve put a conditional offer in that you can’t afford it.
Stevens adds, “At this point, also consider shortening the pay-back period. The faster you pay your bond off, the better off you’ll be. Tough as it may be, you’re saving serious money with a shorter loan term.”
Know where you’re going to
Remember a house is a long-term investment. You will probably live in it for five to seven years. Think about where you want to be during that time. Will your toddler need to go to junior school in three years time? If so, you should focus on the catchment areas for your preferred schools. Will your children have left home? Maybe it’s time to look beyond suburbia? Choose your area with an eye on your future needs.
Decide on your non-negotiables
“It’s useful to have a list of things you aren’t prepared to do without,” says Stevens. “This would include the number of bedrooms and bathrooms. Perhaps plumbing for both washing machine and dishwasher. Off-street parking. A garden or no garden. Gas piping (with all the requisite certificates)/solar/water tanks/a grey-water system. Start a list of basic needs.
Now look at what you love doing. Do you enjoy outdoor entertaining and throwing big parties? Then that trendy little flat is not going to make you happy. Do you prefer peace and quiet? Then that cottage next door to the school is not your dream home.
Look over your list of must-haves. Factor in what’s important to you in life and don’t compromise. If the house is not right, walk away.
Consider appointing a buyer’s agent
“By signing a Buyer’s Mandate, you get a dedicated property professional with a wealth of experience and contacts, to guide you first through the search for your dream home and then through the negotiating process,” explains Stevens. “Buyers are just as pertinent to a property transaction as sellers, so why not give them the option to be represented by an independent expert: someone to unmask the hidden pitfalls of property-buying, a person solely focused on protecting their rights and interests?”
With our large footprint across South Africa, we believe this offering is another way we can fulfil a growing customer need. Making the most significant investment of your life doesn’t have to be such a stressful process. Inexperienced buyers should not have to feel they’re making this hugely important decision on their own and without guidance. They should be doing it in collaboration with someone knowledgeable and trustworthy, who is looking out for their best interests,” says Stevens. “Just Property has always been passionate about educating our property partners about how property can be used as a wealth creation tool – the Buyers Mandate is yet another innovation that will enable us to do this.”
For more information on Just Property please visit www.just.property or call (087) 004 0149