Becoming a homeowner is a momentous milestone in anyone’s life. It means having the freedom to turn a house into a real home, just the way you like it. It also represents an important step in creating a secure financial future. It’s one of the biggest financial investments you’ll ever make, which means it can also be an overwhelming experience.
Besides the costs involved in buying a house, you'll also need to think about things like:
- Bond registration
- Clearance certificates
- Home insurance
And more. To help you navigate the process, here are our top six tips for buying a house for the first time.
1. PRE-APPROVED LOAN
Having pre-confirmation from a bank that you have funds available to buy a home can be a great tool in negotiating a fair price. It can also help you narrow down the exact price range you can afford, so you can avoid disappointment.
2. CONSIDER THE HIDDEN COSTS
Besides putting a deposit down, buying a house involves lots of other "hidden" costs too, such as:
- Bond registration fees
- Transfer duties
- Special levies if you're buying a sectional title.
You should also look at what you're likely to pay for rates and taxes in addition to your monthly bond repayment. This will help to work out your affordability range.
3. RESEARCH THE AREA
Make sure you look at the average sales price of the area you’re buying your first home in, and that the sale price aligns with that. Also consider the area in terms of how much it suits your general lifestyle for things like:
- Transport options
- Nearby schools
- Shops and other conveniences
4. ASK FOR APPROVED HOUSE PLANS
These days, most banks will ask for plans for the house before they grant you the final bond approval. Always check that the approved plans of the house match the structure of what you’re buying. This also includes separate structures like cottages and garages.
5. COMPLIANCE AND CLEARING CERTIFICATES
In order to register a house in your name, the seller will need to provide various compliance certificates, including rates, electrical, and gas certificates. Ask in advance about these to ensure there’s no hold up during the transfer process.
6. LOOK FOR DEFECTS
When you buy a house, the seller is obliged to advise of any latent defects on the property. These are defects that may not be immediately visible by the average person, such as damage to plumbing, rising damp, or structural weaknesses.
In South Africa, the “voetstoots” clause in the deed of sale means that you buy the property as it currently stands, the seller won’t be liable for any defects once the sale has gone through. For this reason, it’s important to know about any potential issues beforehand as this may affect the selling price or other conditions of sale.
Following the above steps to buying a house for the first time helps ensure a more stress-free experience for you. To make sure you protect your investment when buying a home, it’s essential to know exactly what you're in for in terms of costs, procedures, and legal implications with the sales price. Having a trusted adviser such as a very knowledgeable estate agent can help you through this process, leaving you free to enjoy your new home without the headache!
What else should I know about buying a house?
Unless you’re lucky enough to pay cash for your home, which few people are ever able to do, you’ll probably need to take out a mortgage bond that’s linked to the house. This means that until you’ve made your last repayment, the bank could repossess the property in the event of non-payment. Should something happen to you or your partner, such as a serious illness, disability, or even death, that makes it impossible to make the home loan repayments, your family could end up losing their home.
To ensure this doesn’t happen, check the details of your life insurance policy and make sure it has disability and severe illness cover and income protection. In the event that something insurable happens, these benefits will help pay towards the balance of your outstanding bond.
If you’ve taken out a bond with a bank, it will insist that you take out short-term insurance to cover your house against accidental loss or damage caused by fire, theft or natural disasters like floods. This insurance only covers the structure of the house, which is what the bank has financed and has a vested interest in, and not the contents.
Including your household contents in your short-term insurance policy isn’t mandatory but it’s always a good idea. If you were to do a mental calculation of how much it would cost for you to replace all of your family’s possessions you’d probably be shocked at how quickly the value adds up. In the event of a fire, flood, or robbery, it would be incredibly difficult to buy replacements out of pocket.
Resources to Support Buying your First Home
Here are some resources that can help you on your journey as a home-owner:
- Short term insurance for your home.
- Estimate how long it will take you to pay off debt, such as a bond, with our debt repayment calculator.
- If you have a family, you want to make sure that any outstanding debt on your home is settled if you pass away. Having life insurance in place can help with this.
Ready to start moving forward with buying your first home? Chat to our financial advisers today to get advice tailored to your goals and finances.