Purchasing property is undoubtedly one of the biggest financial commitments anyone will make in a lifetime. Being a first-time home buyer can sometimes be a daunting experience, especially when you are uninformed about the various steps and legal requirements that go hand in hand with the buying process. Charles Vining, Seeff MD in Sandton said first-time buyers’ judgement can easily be clouded by excitement. “The most important thing to keep in mind is affordability,” he said. “Ask yourself repeatedly what you can realistically afford. As a guideline your monthly bond instalment should not exceed 25 to 30 percent of your regular household income, before tax and deductions. “Also remember that banks today are granting fewer 100 percent home loans and therefore you should also ensure that you will be in the financial position to make a 10 percent down payment if necessary, and still have enough money for transfer fees and bond costs over and above the purchase price.” Vining said the next step was to contact an agent that you trusted. “Thereafter you should determine exactly what it is you are looking for in a home,” he said. “Start with the things that are non-negotiable and then list the ‘nice-to-haves’. Also, don’t be seduced by the first property you see, take your time and look around carefully before you make a final decision.” He said rates and levies, home insurance, bond protection insurance, water and electricity, home repairs and maintenance should be taken into account. “These hidden costs can totally catch you off-guard if not budgeted for from the get-go. It is also wise to speak to someone who knows something about construction as to avoid nasty little surprises after the purchase. “It’s also highly recommended to budget for possible interest hikes in the near future, and first-time buyers especially, should seriously consider a fixed rate,” he said. The decision by the Reserve Bank’s Monetary Policy Committee to keep the repo rate unchanged at the historically low five percent was good news for first-time home buyers. However, experts predict that interest rates will start to rise again next year.
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