Real Estate Investor Magazine South Africa December / Jan 2016 | Page 66

LESSONS

Buying your First Home
Lessons for first time home buyers
BY VANGILE MAKWAKWA

B

uying a house is the first step on the property
ladder. This will the biggest investment you will
ever make but people often incorrectly make
this important decision based on emotion.
Firstly, check out your credit score and your
affordability. Determine your credit status because
this determines your risk for the bank and your risk
determines your interest rate.
Your credit score will let you know how much
negotiation power you will have with the bank manager
in the home loans department at the bank.
Then, find out your buying power. The banks
normally look at 30% of your income. However, if you
have too much debt the bank will lower your interest
rate which will negatively affect your affordability. This
is all a direct contrast to what the National Credit Act
prescribes.
To work out how much your re-payments will be
divide or multiply your income by 30%. That is your
affordability test. You are looking at your credit profile
and affordability test to see whether you will be able
to afford the deposit. This helps you to improve your
credit profile and your subsequent risk to the the bank
which can help you negotiate a lower interest rate.
Buying a home is a long process and does not take
place overnight.
Make sure a professional can asssit you to secure your
new home and determine your timeline to prevent any
delays.
The normal timeline of events before you buy your
home include:

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DEC/JAN 2016 SA Real Estate Investor

1. You submit an offer to the seller
2. The seller accepts the offer in about three days.
3. You get all your paperwork together such as bank
statements, proof of income etc. which gets sent
either to a bond consultant or directly to the bank.
4. It takes 10-21 days to get your bond approved.
5. It takes another 14 days to get the instructions
about the bond sent to the attorney. The bond
attorney and the transfer attorney will work
together. In that time, they have to prepare your
transfer documents, apply to the Municipality for
rates and taxes and they have got to get your bond
documents signed.
6. Then, they have to send it back to the bank again.
The bank will have a lead time of six-10 days to
ensure that all the paperwork is in place. There is
also a cancellation attorney involved because they
have to attend to the cancellation of an existing
bond of a seller.
7. This all goes to the Deeds Office which has a
turnaround time of about 10-14 days.
Now you are already looking at a total of 62 days,
which about four months ago when you first submitted
the offer to purchase the property and made an offer to
move in by the 1st of the month, you were not aware of
the following delays.
Rather provide for a specific date when you are moving.

RESOURCES
Wealthy-money.com
www.reimag.co.za