Updated 01.06.2021

First Time Home Buyer? – Everything you Need to Know!

First time home buyers often grapple with the fear of debt and a deep-seated need to make the right choice. Understandably so, because buying a home is a huge investment both financially and emotionally. Sometimes, the fear can be too great that you decide to hire a lawyer or a realtor to handle the whole home-buying process on your behalf. While this is acceptable, it might not yield an emotionally fulfilling result. Therefore, you have to manage your emotions to remain objective as you handle the home buying process. To make the journey easy, you should learn everything you need to know about buying your first home.

Tips for a First time Home Buyer

When you decide to buy your first home, you have to go through certain processes to make your first home buying experience less stressful.

First – Define Home Affordability

Today’s lending policies by financial establishments are very strict, so much so that rough estimates of your financial capability won’t earn you a mortgage or a home loan. Instead, you have to provide finer details about your finances to qualify for a loan. The bank will then use this information to determine the amount of home loan you should get for your first home purchase.

Fortunately, there are different free financial tools online that can help you know your borrowing limits based on your financial information. Tools, like a home loan calculator, might not be spot on, but they give you an idea of what you should expect. For instance, they will tell you the amount of money a lender can give you and your expected monthly bond payback.

Alternatively, you can hire an expert to determine your eligibility for a home loan, the amount to expect from a lender, and the amount of monthly loan repayment you will be expected to pay in a process called prequalification. Once you are prequalified, you should use this information to find a house that you can afford.

You should also find out if you qualify for the first-time homebuyer grant for South Africans. The South African government offers subsidies to first time home buyers earning less than R22 000 through the Finance Linked Individual Subsidy Programme, FLISP. This government grant targets people whose monthly earnings range from R3501 to R22 000. To qualify, you have to be eligible for a home loan. You also have to be single and living with a minimum of one dependent or cohabiting or married.

Second – Examine your Credit Record

Banks assess risks using credit scores. Credit scores tell your financial partner whether or not your past debt repayment pattern makes you a risk worth taking.

Credit scores are represented as numbers. The credit bureau uses your transactional history or records and different calculations to arrive at a three-digit figure between 0 and 999. Lower numbers in the spectrum represent a low credit score, while higher numbers represent high credit score ratings.

People with good credit scores are more likely to receive home loans quicker than those with poor credit scores.

Three – Choose a Realtor

Contrary to popular belief, a property agent works for both the seller and the buyer. Even though you can get a good house to buy on your own, seeking the services of a real estate agent makes the job faster. Find an experienced realtor and build a good rapport with, ideally by asking for recommendations from friends and relatives.

Four – Find your Ideal House

Arguably, house hunting is the most exciting part of buying a home. It is also the most challenging part of the home buying process. To make it easier, begin your house hunting process by defining your requirements. For instance:

  • Decide where you would like to live,
  • Define your ideal home size,
  • Should the home be in a gated community or not
  • Do you need a garden?
  • Should the house be close to schools, shops, a medical establishment, and a supermarket, among other essential amenities?

With this in mind, you can start your house hunt journey. Schedule house visits, mostly during weekdays and collect as much information as possible about the houses you visit.

Five – Consider Extra Costs

Ordinarily, buying a home comes with one-off extra costs like conveyance fees, deposit, deed registration and transfer duties. These fees are often paid at the time or during the home buying process. Once you have your home, you also have to take care of your monthly household costs.

Occasionally, you might have to request a gardener’s services, maintain your pool, or hire security at a cost.

In case the property you are eyeing is within a sectional title complex, you have to ask for its financial statements and records to ensure the building is managed properly by agents or the responsible body corporate. These records will also enlighten you on the property’s financial health.

You also have to inquire if the property has any unsettled special levies – a tariff charged on top of the standard levy over a predetermined period. The money collected from special levies caters for painting, security upgrades and other major maintenance projects. If the property has an impending levy, it will affect your cost.

Six – Offer to Purchase

After finding your dream home, you have to commit yourself by signing an offer to purchase. This is the agreement a house buyer enters into with a house seller. It explains all the terms and conditions a seller and a buyer has to fulfil during the home buying process. Before you sign the offer to purchase, ensure you read and understand all the terms and conditions because this is legally binding.

Seven – Carry out a Home Inspection

Ordinarily, the offer to purchase should have a provision for a home inspection. This is your chance to unearth all the defects with the property. Hire a qualified home inspector to assess the house for damages such as structural issues, dampness and water leaks, rotten timber, faulty gas installation, electrical wiring and plumbing.

The seller is liable for all the house damages discovered during your inspection for 36 months since the defects were first discovered.

Eight – Apply for a Home Loan

Approach your bank for a home loan. There are systems in place to assess your suitability for a home loan. In case you qualify for a home loan, the banks ensure that you get an affordable loan without exposing you to financial risks. However, you have to find the most affordable home loan in the market. Seek the help of a home loan comparison service to find a home loan with the best interest rates.

Nine – Close the Deal

After securing a home loan and an offer to purchase, the final part of the process is handled by a lawyer. The attorney will oversee the transfer of ownership from the seller to the buyer, as well as bond registration on your asset.

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