It shouldn’t be a surprise that buying a house is a long and difficult process, since it is one of the most important investments you will ever make. But even though it might seem scary at first, you won’t be going into territory that hasn’t been explored before. The way is clearly marked, and there are guides who know what they are doing who can help at any time.
This article shows you how to buy a house in South Africa in an easy-to-understand, step-by-step way.
Step 1: Planning for buying a house
Now is the time to think about what you want out of being a homeowner. Do you require extra living space to accommodate a growing family? Some new buyers want a property with a yard in order to exercise their animals or participate in other activities outside. Others hope to build wealth through the purchase of real estate properties. Your goals can serve as a guide in determining the qualities of the ideal home.
Are you mentally prepared for buying a house?
There’s being financially prepared to buy a house. Are you, however, emotionally prepared? You should consider your other goals for the next few years. Are you buying with a partner, and if so, are you on the same page financially? Is it possible that you’ll have to relocate for work? Are you considering starting a family? These big-picture questions can weigh in on whether now is a good time to buy a house.
first-time home buyer?
The Finance Linked Individual Subsidy Programme (FLISP) is a government programme that helps first-time homebuyers with low incomes realize their dream of owning a home by providing them with financial assistance. If your monthly income falls within the range of R3,501 and R22,000, you may be eligible to receive benefits from this programme.
Step 2: Get your finances in order
It’s possible that buying a home will be the single most important financial choice you ever make; therefore, before you take the plunge, you should make sure that your finances are in good shape. A home affordability calculator is a tool that can assist you in determining your budget by factoring in your income, debts, location, and amount of the deposit if you want to put one down. You will be able to see how the sum of your potential monthly loan payments might work out, as well as how your finances might change if you were a homeowner.
Step 3: Create a wish list
Consider whether you want to buy an apartment in a new estate, a freestanding house, or something else entirely. Find out what kind of neighborhood you want to live in, whether or not you want to be near schools and hospitals, and whether or not you want to make any improvements to the home you now own.
Step 4: Get a loan Pre-Approval
Pre-approval is a great first step, even though it doesn’t guarantee that you will be approved for a home loan. You’ll come across as a more desirable buyer to sellers as a result. When selling a home, a seller wants to work with buyers who will make the transaction as simple and stress-free as possible. If they already have a lender/bank on their side and have taken the time to get pre-approved for a loan, it is simpler to convince someone to commit to the process of buying a home. See this article on how a pre-approval can affect your credit score
Step 5: How Much Can You Actually Afford?
It is important to get a sense of how much a bank is willing to loan you in order to buy your first home before you start looking at houses. You may believe that you are able to afford a home that costs R1,000,000, but banks may believe that you are only good for R800,000 based on factors such as how much other debt you have, how much money you make every month, and how long you have been working at your current job.
In addition, the majority of real estate agents are unwilling to spend time with clients who have not indicated the maximum amount that they are able to invest in a property.
Step 6: Assess your credit record
Your bank will use your credit score to determine whether or not they consider you to be a good risk based on how well you have historically repaid debts. A high credit score rating is one of the most valuable personal financial assets you can have, so it stands to reason that the higher it is, the better it is. If your score is higher than 600, you will have a good chance of getting approved for a home loan when buying a house. You can get a free report from Clear Score.
Step 7: Hire a Real Estate Agent
Your real estate agent will assist you in finding homes, communicating with the seller, and negotiating the sale of the home. The right real estate agent can make a huge difference throughout the entire process of purchasing a home. This includes knowing the ins and outs of the local market, providing emotional support when it feels like the search will never end, and assisting you in negotiating with the seller. Interview at least three different agents. Inquire with people you know who have recently purchased a home and whether they would recommend using their agent.
Step 8: Shop for Your New Home
It can be very exciting to look at different houses until you find the one that feels like it was made just for you. It is useful to have a clear idea of what you want before beginning your home search. This will help you narrow down your options and provide direction to your real estate agent. If you are unsure of the appearance of your ideal home, touring different properties can assist you in establishing those expectations.
Step 9: Make An Offer
When you have finally found your ideal house and have made sure that all of your financial matters are in order, you are ready to sign an offer to purchase the home. The terms and conditions of the sale of the property are outlined in this document, which serves as an agreement between you and the seller of the home. Your acceptance of the offer to purchase constitutes a legally binding agreement, and if you do so, you will be subject to significant penalties for breaking the terms of that agreement.
If the seller declines your offer, you have the option of making a counteroffer or withdrawing altogether, depending on the reason(s) they did not accept it. If the seller makes a counteroffer, discuss the situation with your agent to determine whether you should accept it or make a counteroffer of your own. When it comes to earning their keep, real estate agents are most valuable during the negotiation phase.
Step 10: Get a home loan
After you and the seller have reached an agreement on the terms of the purchase, the next step is to secure a loan to finance the transaction. This can be done either approaching various banks separately or using a service like ooba.co.za to get a good comparison of offers.
Step 11: Home Appraisal
Appraisals are conducted on existing homes and involve the inspection of the home by a trained and impartial third-party appraiser. When purchasing a home, selling a home, or refinancing a loan, you are required to get an appraisal. Appraisers conduct a thorough exterior and interior examination of the property, as well as the collection of specific property and housing market data.
The sale of the house will proceed if the appraisal determines that the home’s value is similar to or greater than the asking price of the property. There is room for negotiation between the buyer and the seller if the appraisal determines that the value of the home is lower than the sale price.
Step 12: Home Inspection
A house inspection gives information on a home’s present condition and features. Home inspections are not mandatory, although they are highly recommended and are frequently a contract condition. Property inspectors examine the interior and exterior of a home, inspecting everything from the plumbing to the foundation. This will ensure that the property is in good condition. This will help you avoid buying a house with issues covered by a quick paint job.
Step 13: Transfer and bond registration
As soon as your application for a bank loan is accepted, the seller of the home will engage the services of a conveyancing attorney to complete the process of transferring ownership of the property to you. This is the method that is used to transfer ownership of property. During this time, the bank will work to have the bond registered in your name by hiring a bond attorney. You will be responsible for paying the expenses associated with the transfer of property as well as the bond registration.
The transfer duty, which is a tax that must be paid to SARS, is included in the cost of the transfer. Transfer duty is not required to be paid on properties with a value of less than R1,000,000. On average, it takes around three months to complete the procedure of transferring property and registering bonds.
Homebuyer: A Simple Home Buying Timeline for First-Time Buyers. homebuyer.com, 29 Nov. 2021, homebuyer.com/learn/timeline-for-buying-a-house.
NerdWallet: 15 Steps to Buying a House – NerdWallet. www.nerdwallet.com, www.nerdwallet.com/article/mortgages/home-buying-checklist-steps-to-buying-house. Accessed 21 Oct. 2022.
Investopedia: First-Time Homebuyer’s Guide: Steps for Buying. www.investopedia.com, 13 June 2022, www.investopedia.com/updates/first-time-home-buyer.
Ooba: Buying a House in 10 Steps: Your Complete Guide. www.ooba.co.za, www.ooba.co.za/resources/buying-a-house. Accessed 21 Oct. 2022.