Few things are more exciting than making the leap from being a renter to being a first-time homeowner. Getting swept up in all the excitement is a wonderful feeling, but some first-time homeowners lose their heads and make mistakes that can jeopardize everything they've worked so hard to earn. So, whilst you are ‘shopping around’ for that home that will tick all the boxes without breaking the bank, consider these top tips:
Get the best bond: You owe it to yourself to pursue the best possible interest rate for an amount you can afford, so shop around for pre-approvals. As a first-time buyer entering the property market, take advantage of favourable lending rates.
Location, location, location: This overused adage still holds true. When considering where to buy, try to do as much research as possible on the neighborhood, its facilities, trends and developments over the last years as well as possible restructuring or developments in the (near) future. This does impact your house value. Does it offer the safety, amenities and schools you require? Will the commute to work be feasible?
Size does matter: A global trend in downsizing has seen homeowners make the most of smaller properties. In South Africa, the exponential increase in rates and taxes, electricity and water, means higher overhead costs. If your budget allows for the upkeep of a larger house and property, fantastic, but if it doesn’t, don’t overextend yourself to keep up with the Dlamini’s.
Plan baby plan: Purchasing a (first) home involves many steps from tying up ends on your departure front (be it from that garden flat, your childhood bedroom, commune or that rental) to negotiating with agents, sellers and movers. It might feel overwhelming but you’ve got this. Make lists, speak to those involved, ask questions, draw up a timeline and tick off that to-do list as you go along.
Budget more, spend less: Becoming a new homeowner comes with a variety of costs such as a bond organisation and registration fee, transfer costs, agent’s commission, attorney fees and new furniture, appliances and electronics. Find out what all these (hidden) costs amount to, include them in your budget and empower yourself with this financial knowledge to avoid monetary hiccups along the way.
Insurance matters: One of the joys of becoming a homeowner is that you have invested in an asset. For most of us it’s the biggest asset we’ll ever acquire. This asset needs to be insured though for you and the bank’s sake. That’s why homeowner’s insurance (for full title deeds) is compulsory but take heed, it does not include cover for the contents of your home, only structural damage to the property.
No matter when you become a new homeowner, it’s an ideal opportunity to get your finances in order and re-evaluate your goals – you don’t want to miss a single bond repayment. A new home comes with many challenges but the benefits and joys will far outweigh the initial hurdles.