HIGHEST PERCENTAGE OF BUYERS ARE FIRST TIMERS

Could this be the right time to buy your first property? Let’s look at the facts. The interest rate has remained low and stable, house prices haven’t gone up, and perhaps you’ve just received a salary increase. There are more first time homes being bought than in any other sector of the property market – bond originators, ooba, say that countrywide, 50 percent of home loan applications emanate from first time homeowners. Recently, 64 percent of Wakefields’ sales in a single month were made by first time homeowners. 

First and foremost, you need to look at your financial wellness. You can only buy the property you can afford…so make sure you know what you can afford.

Buying your first home is one of the most exciting moments in life, so make sure you understand the process, and approach it armed with everything that is needed. You don’t want to be disappointed.

Your history. To borrow money from the bank, you need to have a clean credit history. Even the smallest debt at a clothing store from two years ago can impact negatively on your credit rating. Make sure that debt is cleared, and that it’s removed from your history. Check that it’s been done.

A deposit. You need to have a deposit saved up, or you’ll need your parents or a relative to loan (or give) you that amount. Banks are far more likely to grant you a loan if you have a minimum of 10 percent of the price of the property.

Regular income.  If you are raising money from the bank, you will need to prove to them that you can afford the bond repayments - you need to produce proof of your salary (three months’ salary slips/bank statements) and that you’ve worked there for a certain period of time. If you are self-employed, there are other, more complex criteria to prove your income, so speak to a professional/bond originator.

Shared purchase. If you are unable to service a bond to the full extent, can you purchase the property together with others – a parent, a wife, a sibling? That way, you share the financial commitment. Alternatively, you may have a family member prepared to stand surety for the purchase – in other words, they underwrite or guarantee payment of the loan.

Affordability. You need to know - with your salary and the deposit you have - precisely how much the bank is likely to loan you. It’s easy to find out. Go to the ooba online affordability tool on their website, fill in the figures…and you’ll know in seconds what loan you are eligible for. Ooba will tell you how much you can borrow, and although this on line calculation doesn’t guarantee that you’ll get the loan, it gives you a pretty good idea.

Rent to buy. There are opportunities for those who can’t afford to buy right now, to rent first with an option to buy later. This is worth considering if your financial situation isn’t at the point where you can make the necessary financial commitment.

You can’t afford to buy in the area you want to live. If this describes you, you could consider what others are doing – you buy in the area you can afford, let out that property, and rent in the area in which you want to live. If you do the financial calculations carefully so the figures work – and you bide your time – this is an attractive option.

Additional costs to buying a home. There are costs associated with buying a home, so discuss this with your estate agent. When you pay X for a property, your costs will be Y. There are a number of different costs like transfer costs, costs to raise a home loan, and others, but your estate agent will give you a very good estimate. 

Talk to an estate agent. You need to talk to somebody experienced in property, and who knows the area well. If you have a family, you need to know where the schools are, the quality of the schools, where the public transport is, what retail opportunities are in the immediate vicinity, and how easy is the access to your/your wife’s/your children’s schools/workplace. These will all impact on where you choose to buy.

Freestanding home or sectional title unit. This is your choice of course, and finances count, but consider all the factors, in particular your lifestyle. There are many elements from security to levy payments, but if you want to have a few dogs or enjoy repairing cars, a residential complex may not be for you. Alternatively, if you travel a great deal, your family might be better off in a gated community. Once again, compare costs and know that you can afford them.

Do your homework. The property market might be enticing you to buy, but you need to do your homework so you know which house you can afford…and which you can’t. There are so many online tools available to assist you, but if you’re not computer-savvy, head into one of our branches and chat to one of our experienced sales consultants.