Purchasing your first house is a huge step. It can be scary because there are so many things to consider and so much you don’t know. As one of the most significant investments you’ll ever make, it should come as no surprise that purchasing a home is an extensive process. While it may appear intimidating at first, you won’t be venturing into unknown territory. There are professional consultants who can assist you along the route, and the process is well-documented. If you’re not sure where to start, here’s a step-by-step guide to buying a house in South Africa, so you can approach one of the most significant decisions you’ll ever make with confidence.
A step-by-step guide to buying a house in South Africa
We’ve demystified the process and broken it down into easily understandable steps to help you on your way to becoming a proud homeowner.
1. Decide how much you can spend
When purchasing a home, affordability is the single most crucial factor to consider. Before you begin looking for a home, you should have a clear understanding of the financing options accessible to you. Set a hard budget by calculating your home loan eligibility with an affordability calculator. Remember to factor in the upfront costs such as lawyer fees and the ongoing costs of ownership, such as rates, taxes, electricity, and basic property maintenance.
2. Assess your credit record
Your credit score tells your bank whether or not you’re a good risk based on your debt payback history. The credit bureau will issue your mortgage lender with a three-digit number ranging from 0 to 999 calculated based on your transactional history. Naturally, the higher the better, and a high credit score rating is one of the most valuable personal finance assets you can have. Here’s what you’ll need to do to prepare for the financial commitment that a mortgage entails.
Build your credit score
- Get a free credit report from one of the credit bureaus to see where you stand.
- Always pay all of your bills on time.
- Before applying for a home loan, pay off as much debt as possible.
Save for a deposit
Why should you save for a deposit?
- Higher chance of getting your bond approved.
- The amount owed is reduced, which saves you money on interest throughout the life of the loan.
- You’re in a better position to negotiate an interest rate since there is a lower risk for the bank.
3. Find a reputable estate agent
Purchasing a home involves numerous administrative and legal procedures. These include the application process for a home loan, the seller’s obligation to furnish mandatory compliance certificates, and zoning restrictions. As such, find a real estate agent who is on top of their game, knows the neighbourhood and will look out for your best interests. It’s critical to work with a knowledgeable and trustworthy real estate agent who will listen to your needs and assist you through the process smoothly.
4. Find your ideal home
It’s time to find a home that meets your requirements. Before going on a house hunt, the first step is to have a clear sense of what your requirements are. Consider the following:
- Where you want to live.
- Whether proximity to a school, medical institution, supermarket and stores, and other useful amenities is necessary.
- Closeness to your place of employment.
- The availability of a convenient and reliable public transport network.
- Whether it’s important to be in a quiet neighbourhood.
You may start looking for a home once you have a clear notion of what you want.
5. Make a purchase offer
Once you’ve found your dream home, and got all your finances in order, you’re ready to sign an offer to purchase. This is a contract between you and the seller that spells out the terms and conditions of the property sale. An offer to purchase is more than just a verbal agreement; it is a legally binding contract that cannot be readily changed once made. With this in mind, it’s important to have a full understanding of what the agreement entails before signing it. Keep in mind that the seller is required by law to report any known building issues.
6. Arrange a home inspection
A house inspection should be a condition of the purchasing agreement. This is your chance to find any hidden flaws in the property, and you must understand your rights in this situation. Sellers are accountable for all latent defects in their property.
7. Close the deal
So you’ve made an offer on a house and secured a mortgage. What’s next after your bond has been approved? The process is delegated to attorneys, who will manage the property transfer from the seller to you as well as the registration of the bond over your property. When everything is finished, it’s time to move in and start enjoying your new home.