Today’s real estate market offers many opportunities for those property buyers who may have previously not been able to meet the bank’s criteria, but are now able to access finance.
The pricing correction along with the low interest rates has made this the ideal time for first-time buyers to invest in property. However, says Grant Gavin, Broker/Owner of RE/MAX Panache, which operates in the Durban North and La Lucia regions, before buyers take the initial step towards homeownership, they should make the necessary preparations to ensure that the process is as smooth and hassle-free as possible.
1. What can you afford?
He notes that the first step a potential buyer should take is establishing what bond they can afford and assessing affordability can be done in several ways. “The buyer can either consult with a bond consultant, a real estate professional, or even an affordability calculator on one of the many bank websites."
He says once buyers know what bond they can afford, they can add on any cash deposits or other money that may be available them, which will give them a good understanding of what price range of homes they can look at purchasing. "Rather go through this process first, than find the home of your dreams and be let down because you didn’t establish up front what bond you could qualify for."
2. Budget for extra costs
Gavin says that buyers must remember to have money saved up for the other costs involved in the sales process.
Buyers are responsible for the transfer duty to SARS, as well as attorney fees for deeds office transfer and bond registration costs. It is important that they are prepared for this before entering into a sales agreement.
3. Have your affairs in order
Another element that buyers should have in order beforehand is their personal paperwork.
Gavin explains that under normal circumstances a buyer will receive a period of 21 working days to obtain the necessary home loan for a property, and the first week is often delayed because buyers don’t have their affairs in order.
“To avoid delays that could be averted, buyers must make sure that they have the required supporting documentation before they apply for their finance."
He says a buyer will need to have three months' bank statements, as well as well as payslips from their employers - and in the instance where the buyer is self-employed they will require three years of financial statements that will need to be submitted with the application.
4. Choose a good location
Offering advice to buyers on choosing the right property, Gavin says that position is always important. “The nicest looking home in a bad location will always seem attractive because the price will reflect the position."
He says buyers should rather go for the worst home in the best area, and in time, as their income grows and they are able to upgrade the home, their investment in the property will be justified when selling in the future.
Gavin cautions buyers that when purchasing property in the older suburbs it’s always worth getting somebody to inspect the roof. He notes that this is an aspect that even the seller does not usually check and there may be problems that they are unaware of.
5. Check for defects
If defects are detected, often they are expensive to repair. Otherwise always be aware of damp problems – as any indication of damp might mean that a greater problem lies elsewhere.
“Remember that while it is the seller’s responsibility to point out any defects of which he is aware, the buyer still has a responsibility to inspect the property to make sure everything is in order before signing the contract,” says Gavin.
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