Buying a house: What do I qualify for?Submitted by Cathlen Fourie
Understanding what you need to buy a property can be one of the biggest challenges that buyers face. The good news is that, with the help of a strong team of realtors, this process becomes much easier to navigate. Pearl Scheltema, CEO at Fitzanne Estates, shares her insights for those looking to purchase their own home.
Determining your budget
“Being financially prepared for the commitment of buying a home is essential, and key to a successful first step to your property journey,” explains Scheltema.“When looking at properties, keep your available monthly budget front of mind. Your monthly bond repayment cannot be more than 30% of your gross monthly income, so let this figure be the guide in deciding which property to apply for,” she continues.
Depending on your loan terms and interest rates, your monthly repayments will vary from around R3 800 for a home of R500 000, to R5 500 for a R700 000 property. You’ll pay R11 600 a month for a home valued at R1.5 million, and R15 500 for one of R2 million.
Don’t get stuck on the deposit.
Whether or not you decide to put down a deposit on your home loan will largely depend on your available cash flow and your status as a loan applicant. For many homebuyers, this upfront cost is a deterrent to entering the property market.“It’s always a good idea to work through your agent when negotiating home loan terms. Your property team will be able to find you the best possible offers and rates, making it possible to get a 100% loan even as a first-time buyer,” Scheltema explains.
How to calculate costs
Upon the successful application of your bond and the transfer of your property, you’ll need to pay transfer costs. These are paid to the transferring attorney and can vary depending on the cost of your property. Your transfer costs are made up of the conveyancer’s fees (plus VAT), along with the transfer duty that is payable to SARS. Transfer duties are waived in cases where a home is sold for less than R1-million, or when a property is purchased in a new development.
“It’s generally safe to budget approximately 5% of the purchase price for transfer and bond fees,” says Scheltema. This means that, for a home valued at between R500 000 and R700 000, your transfer costs should be between R40 000 and R50 000. Homes in the R1.5 million range accrue a transfer cost of R80 000, while those valued at R2 million set you back R128 000 in transfer fees.
Your new property will also require you to pay a water and electricity deposit. These costs vary depending on your location and the value of your property, but an average of R1 500 should be budgeted for.
Finally, it’s important to keep in mind that, should you be buying in a Sectional Title Scheme, you will be liable for levies and membership fees. In many schemes, these costs are payable upfront and should be included in your initial budget.
After doing the math and deciding that you’re ready to buy a house, you need to get to work and apply for your loan! Scheltema emphasises the importance of working with an experienced agent: “When working with a reputable real estate firm, you are supported every step of the way. We pride ourselves in giving our clients the guidance and advice they need to be successful homeowners.”
What you need to apply
A home loan applicant needs to supply the following documentation to the bank: their three latest bank statements, three latest payslips, a copy of their ID, and FICA documentation.
For those applying as business owners, there are additional checks to be done. Scheltema explains: “Business owners or independent contractors need to supply the bank with their six months bank statements for both their private and business accounts and may be asked for larger deposits than those applying as employees.
”If applying to buy a property within a Sectional Title Scheme, you will also need to supply the bank with comprehensive financial records of the scheme you are buying into.
Preparing for success
Buyers in a Sectional Title Scheme are automatically Trustees of that scheme. Understanding the workings of the Body Corporate and being informed about the financial statements of your property’s scheme are key to protecting your investment.
“Our Trustee Training course equips new trustees to make the most of their new role, giving them the confidence, they need to build their property’s value,” Pearl advises.
Having a trustworthy and reliable team on your side makes all the difference. Contact Fitzanne Estates today to find out how you can reach your property goals!
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