Team Talk
Property Talk
By Marc van Heerden
Understanding Your Buying Power
Understanding your buying power is very important in order for you to make the right call regarding
the property once you find it.
For many it’s a daunting task that seems to be greater than it really is; and it remains an element of
fear for the consumer. This however should not be the case… instead it should be seen as a tool to
help you achieve your dreams. By understanding credit and the potential of your income is very
important and I will try to break it down to make better sense and less of a daunting task.
Credit, in short is the amount of money that the bank will see you as “fit” to receive on a property and
is managed by means of two things 1) Credit score/rating and 2) Disposable income (or the extra
income in your budget). Bear in mind that if you are renting, then the rent paid every month will be
included into this category.
So, the bank says you qualify for an amount… what else should you know? There are other costs which
are not included in your home loan. These costs are only applicable at the start of the life of the loan.
These costs will be 1) the Bond Initiation Fee and 2) the Transfer Costs (Legal Fees). This value changes
in accordance to the value of the property, but the guideline is approximately R50,601 for a property
at R1,000 000. A more accurate value can be determined by your Real Estate Agent or Bond Originator
on your specific transaction. This amount will be payable once you have qualified for your bond and
should not be factored in as a deposit toward your loan, but as costs toward the transaction.
What do you do if you are in debt or carry a less than pristine credit record? Simply put...clean it up.
Credit is an evolving and growing creature that is constantly changing according to how you care for it.
If you have current debt that is burdening you financially, then the best thing is to pay it off as soon as
possible. A humble amount slightly higher than minimum payment can make a massive difference in
reducing the total value over time, but you need to remain disciplined in order to achieve this. If you
have a record that is reflecting negatively on your profile then you should consider settling in a similar
fashion as previously mentioned. The good news is that because credit is ever evolving; it can be
rehabilitated, but will take time. Decide on your time frames and manage your payments accordingly.
Once your debts have been settled or at least brought back in line to meeting minimum payment
requirements; then it will take approximately 3-6 months before your credit score will reach an
acceptable level to apply for a home loan.
Knowing your value will place you in a better position and allow you to make a sound investment right
from the beginning of the home owner journey.
Handy Tips
· Know your buying power
· Put aside a portion of savings that can
be used toward costs
For more advice on property options and the
due process of buying,
selling and investing…
Marc van Heerden
Cell: 073 198 9369
Tel: 041 360 0365
[email protected]
www.sothebysrealty.co.za
Each office is independently
owned and operated
Contact us on...
www.facebook.com/SothebysInternationalRealtyMarcVanHeerden
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Luke 18:27
“But He said, "The things that are impossible with people are possible with God."