Home Loans

Are you ready to become a homeowner?

One of the most incredible feelings of joy and accomplishment is the day you decide to purchase your very own home!

True, one can continue to rent and not have to concern oneself with rates and levies and all the other garble that comes with home ownership, but the benefits far outshine these minor components. The idea of breaking down a wall to open up the living room or adding an extra garage for that new jet ski you just purchased for the summer season, is a wondrous feeling and it’s all possible when you own your own home!

The only thing is, you may be ready, but how prepared are you? Do you have a large enough deposit, do you even have a deposit at all? Do you qualify for a home loan or not, what kind of home are you even able to afford now that you think about it! Do you need an additional personal loan to be able to afford the much-needed repairs on your new home? All these questions can bring on a mild sweat, but there’s no need to walk around drenched in your own concern, there are professionals out there just waiting for your nerves and uneducated-in-the-home-loan-department-call!

So, get a towel and wipe the sweat from your furrowed brow and start doing some research. The more you know, the better you’ll feel and the better you feel, the more likely you’ll enjoy this experience as it’s meant to be enjoyed! It’s a massive financial decision in one’s life, and most major South African banks realise this, that is why the process is made far simpler to appease the new homeowner and go through it respectfully and thoroughly, resulting in you buying your dream home with all the bells and whistles and none of the financial woe.

Am I doing the right thing by buying a property?

Well, truth be told, only you can answer that question. But at the same time, it's important to consider the fact that the sole reason you are debating this decision in your mind is a result of the anxiety of making such a huge decision. Buying a home is the largest purchase you will ever make and doesn't compare to other forms of debt like vehicle finance and personal credit. These concerns could very well be clouding your view on all the reasons it’s exactly the right thing to be doing!

The beauty of the financial question – affordability – is that if you are not able to afford the dream home or the bond repayments or meet the minimum deposit amount, then quite simply, you won’t be approved! The checks that are done to assess whether you can afford the home loan are thorough, hence this concern should be alleviated immediately if you are approved.

The other reason why it might not be a good decision (which has nothing to do with financial ability) is whether purchasing a home at all is the right thing to do for you. Perhaps you have parents that are old and are leaving the family home to you when they pass on, or perhaps your company is expanding and you might need to relocate, there are a number of reasons why staying in the renting market might be the best thing for now, however it’s important to note that it is always better to own an estate than to rent from someone else. Regardless of the benefit of being able to alter and renovate as you wish, you are also investing in something that accumulates wealth as time passes.

Once you realise that this is the dream home, there is no reason why I shouldn’t be buying it and every reason why I should be, you can afford it because you’ve already done a few sums based on your research online, then without a shadow of a doubt, you should feel confident that it’s the right decision. An exciting one too!

I’ve decided to go after my dream home! What are my next steps?

The first step is to ensure that your finances are in good order. To apply for a loan with mounds of credit with outstanding balances etc, you are only setting yourself up to fail. Make sure it looks as good as it’s going to get, in order to get an accurate approval amount for your affordability. This means you need to pay off all your short-term loans and credit cards and make sure you make your car loan payments on time to ensure your credit score remains in peak form.

Choosing a lender is the next part of the process. Apply through many, and ask your friends for references and family for their chosen lenders, all of this advice will be a great help. You’re after a lender that has your needs at heart and understands your financial situation best. Also, make sure you try with your personal bank – often they’ll give you a better rate since you’re already a loyal client of theirs.

Get your deposit ready, because this amount will directly impact the amount that you will be able to loan. The higher the deposit, the higher the loan amount and of course, it’s always best to have as much as possible available if anything, to reduce the amount of capital that you have to accrue interest on through the bond period.

Once you have all your ducks in a row, you’ve done your homework, chosen a lender, received all the advice you can possibly stomach and managed to secure a decent deposit, then it’s time to apply and cross fingers, toes and everything you can in hope of receiving approval! You can apply with most lenders via an online loan application but, going into a branch is also an option if you prefer a face-to-face discussion. Remember one important thing, just because one lender doesn’t approve of you, is not to say another one won’t. Don’t give in too easily if one door closes on that dream home, try everything before reassessing your budget.

Avoid these common mistakes!

Mistake #1 – Not doing proper research

Need information? It’s most likely already in your hand, if not your handbag, yip your cell phone has access to the internet, which means there is no excuse ever, why you can’t read and look up any answers or advice, our client reviews on home loans and the lenders out there. Skipping this part is a huge mistake because every lender will try to sell you their service, but it doesn’t mean it’s the best. Find out if you can refinance your loan at a later stage and perhaps use your home loan to consolidate your debts. You may not need it right now but it's always a good idea to have the option open.

Mistake #2 – Investing in a poor area

Nice neighbourhood? Nice house? But is it in the right location? If it isn’t, you could very well end up paying a bond for years and years, only to run at a loss later down the line due to the area being one where properties were depreciating. Make sure you choose an up-and-coming area, or one that you at least know will appreciate over time.

Mistake #3 – Being blinded by the flaws

Often, we’ll see a stunning, picturesque home and cannot wait to get inside and be further awestruck by its magnificence! So much so that we will it to be more attractive than at times it really is. You so badly want it to be perfect that you are blinded by the subtle imperfections – like a sinking floor in the corner, or cracks in the framework. Pay attention – it’s always a good idea to take someone objective along with you for this part!

Mistake #4 – Not taking all your needs into account

Do you have kids? Do you plan to? How many? Pets? Is the yard big enough for them to run around? These are questions you have to ask yourself before making this call because it could end up being a very costly exercise if you buy a house in haste without having thought through your future in that home. Cater to all possibilities! It’s better to not use a space in the house than to realise you have no space for something (or someone) that will be there in the future.