Buying your first house and don’t know where to start? Here are some expert tips from Nedbank Home Loans that you should definitely take note of.
1. Do Your Homework
Informed property buyers will get better deals. Find out about the property market and get a feel for property costs in the areas you like. If you do this you will be able to recognise a good deal and also avoid paying too much for a property. One of the choices you will need to make is whether to buy a newly built home or an existing home.
2. Location Is Key
In order to buy a property with good investment potential, the neighbourhood you buy in will be a key factor. For example, if you are looking for a family home, it would make sense to buy a property close to schools, créches, etc. Finding a home close to where you work may be another requirement, as traffic and increased travelling times can influence a residential property’s price.
3. Buy Within Your Means
It is important to ensure that you will be able to make your bond repayments over the term of the home loan. Buying a good property is about more than just the property itself; the location is very important. You may find that you have to sacrifice on space or an extra bedroom in order to buy a property in a better area, but this will be well worth it in the long run. The idea is to get your foot in the door of the property market and to buy wisely.
4. Understand The Costs
- Bond Registration Costs are paid to the conveyancer (registration attorney) for the registration of the mortgage bond. Fees comprise mainly the conveyancer’s fee plus VAT.
- Transfer Fees are payable to the transferring attorney appointed by the seller to transfer ownership of the property from the seller to you. Fees are based on the purchase price of the property comprising mainly the conveyancer’s fees plus VAT and transfer duty payable to SARS (only applicable to property values greater than R600 000).
- Initiation Fee is a once-off fee to cover the cost of processing the home loan application.
- Interest on the Loan is the financing charges payable to the bank for the duration of your home loan for the funds advanced to you by the bank. Interest is calculated on the outstanding daily balance and debited on the first working day of the following month.
A monthly home loans repayment which typically comprises:
- Basic instalment, which includes capital and interest
- Home owner’s insurance (HOC) premium, if applicable
- Loan Protection Assurance (LPA) premium, if applicable
- Monthly service fee payable for administering your home loan account
5. Interest Rate Changes
If you choose a variable home loan interest rate, any adjustments to the prime rate will directly affect your home loan interest rate and therefore your monthly home loan instalments, i.e. if the prime rate is lowered your monthly instalments will in turn be lower; if it increases your monthly instalments will also increase. We advise you to allow for potential interest rate hikes when calculating your budget, unless you decide to opt for a fixed interest rate option. We offer 12-, 24- and 60-month fixed rate periods.
6. Read The Fine Print
Buying a property comes with a fair amount of administration. As a first-time homebuyer you should familiarise yourself with the bond application process. Request that your bond contract documents and application forms are explained to you in detail, keep copies of all signed documents in a safe place and ask questions if you do not understand something.
Go to nedbank.co.za/homeloans for more information and to make use of their handy home loans calculators.
