Although the South African economy can be treacherous, with interest rates hikes and banks becoming extremely conservative with regards to whom they are willing to lend money, it remains categorically true that buying a property is the best investment you will ever make. Examining the last 20 years, we have seen a constant growth in the property market of up to 30% per annum. This outweighs the return on any investment bank account, stock or share. There is no other kind of investment in South Africa which offers that kind of return. It is also important to take note of the fact that it is a buyer’s market at the moment and there are many wonderful opportunities to seize, not only for investment purposes, but also to make your dreams come true in finding the perfect home for you and your family.
Step 1: Determine your affordability
When a bank examines your bond application, they generally work on the rule of thumb that your bond repayment should not exceed one third of your income. Many of us are not able to purchase a property if it were to depend on us alone. This is why in many instances husbands & wives, family and friends purchase a property together. Jointly, they can easily meet the bank’s income criteria. The key point to remember is that your bond repayment can vary depending on the interest rate. Calculate a worst case scenario and make sure that you will still be able to afford your monthly bond repayment.
Step 2: Go hunting for the perfect home
There are many wonderful properties on offer, especially new developments. However, regardless of the price, the home has to speak to you personally. After all, you will be living there for some time. Consider the area, proximity to your job and schools. Think about the kind of property you want, be it a townhouse or a freestanding cluster. Sometimes, we do dream and feel inclined to reach higher than we ought to. Relax; it’s perfectly fine to feel that way. Remember that we all have to start somewhere. If your heart is set on a freestanding cluster, but you can’t afford one, then consider buying am apartment and selling it a year or two later. The proceeds from doing this will certainly put in line to buy that beautiful cluster. It is definitely worth the wait! Sometimes it can be a daunting task to find that perfect property. This is when the services of a reputable estate agent are invaluable. We at MRealty assist our clients to find a perfect match and spare no expense in delivering excellent customer service. You should expect no less from any estate agent as you are making an important decision. The best advice we can give you is that when you find that perfect property and you are ready to buy – DO NOT WAIT. Properties in South Africa are sold on a first come – first served basis. If you like the property, then make an offer to purchase.
Step 3: Sign the documents
When you are ready to buy, an estate agent will assist you to make an offer to purchase. Once you have completed this document and the seller has signed it, the document then becomes a deed of sale (which is a binding contract). This document states the terms of purchase between all the parties involved and usually expires within a few days if the seller does not accept it. Make sure that the contract you are signing is from a reputable estate agent.
Step 4: Raise a mortgage bond
This step involves applying to the banks for home loan finance. Usually it is better to work with a mortgage originator to achieve the best results. They will fight on your behalf to make sure that you get the best possible interest rate. Your estate agent can usually refer you to a professional person. It is my experience that it is best to use an originator whom your estate agent is familiar with. If any problems arise, matters can be dealt with quickly which in turn results in better service for you. When buying from a property developer, they will usually insist that you make use of their in-house mortgage originators. This is a standard practice.
Step 5: Move into your new home
Once you have received a final grant from a bank and accepted it, the documents are forwarded to an attorney who is appointed by the seller or the developer. Once the attorney is ready, they will call you and make an appointment with you to sign all the required paperwork. Once this is completed, the documents are forwarded to the deeds office and the property is registered in your name. This process can take up to 8 weeks. Many sellers will allow you to take occupation of the property before it registers in your name. Should this be the case, you will be asked to pay occupational rent which is calculated between 0.8% – 1% of the purchase price.