POLOKWANE – From an early age, people dream of having their own home.
One would find “buying a house” on many people’s bucket lists.
Owning a home is indeed also considered a privilege, but according to Wikus Olivier, debt management expert at DebtSafe, there are things to take note of before you can even think of buying a house.
Olivier highlights considerations and certain questions you need to ask yourself, before buying a home or applying for a bond:
Credit Profile:
- Do you know what your current credit profile looks like? If you have no idea, don’t you think it is about time to ‘get to know’ your credit record? To learn more visit: TransUnion, XDS or Experian.
- It is better to do the enquiry yourself. Do not ask the bank what your credit record looks like, you have to make sure you get the best chance to get approved for a bond.
Monthly Budget:
- What about your month-to-month budget? Will you have enough money for your monthly bills, living expenses and a bond or will you barely make ends meet?
- Do you have a monthly budget on your phone, computer or the fridge to indicate if your cash flow is healthy? If not, first things first, start making use of DebtSafe’s template or try a phone app like: 22seven.
Bond Payment:
- How much money will you need for a bond payment? A bond calculator will indicate the loan amount you need to budget for. You will have to make sure you are able to pay the bond and other expenses.
- Say your bond is R10 000 a month, you’ll need an extra 20+% for property rates and taxes, hidden expenses like levies, waste management, water and electricity, sanitation, emergency repairs and maintenance on your new house as well.
- The instalment basically determines what the affordability amount is.
Saved up Cash:
- Will you be able to put down a deposit if the bank does not finance 100% of your bond?
- Have you saved enough money for the conveyance cost, postage and sundries, deeds office registry fee, initiation fee, transfer fee and administration fee that are not included in the bond?
Debt Status:
- How much debt do you currently have? The bank may say that you are over-exposed.
- Your house, debt and everything else must not be more than 60% of your disposable income.
Interest Rates:
- Take note that interest rates will vary based on the repo rate. You can opt for a fixed rate, but this will include a higher tariff.
“Remember that if you are struggling to pay your current bills, buying a new home will only contribute to your money woes. You therefore have to be 100% certain that you can afford a home. You’ll know it is time to ask the above questions when your budget is well in balance and when you don’t want to rent anymore,” says Olivier.
“If you are in a good financial position and you want to buy a house, depending on the area, your bond payment can be lower to pay off on your own home instead of spending that money on rent for someone else’s house. It is therefore an important decision to make, so be mindful and consider the pro’s and con’s carefully.”
