Buying property, while it is an amazing experience, it can be quite daunting. Here are a few tips to help make the process a little bit easier for first-time buyers.
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Tips on how to successfully buy your first property.
1. Research
When starting your journey into home ownership, it's crucial to thoroughly research the real estate market, property values, and neighborhoods. Understanding the local market conditions will empower you to make informed decisions and find the right property that suits your needs.
2. Bond originator
Before committing to a particular property, speak to a bond originator who will assist you with the process. Also, very important for first time home-owners is to establish how much you qualify for as well as having a plan and thoroughly researching the areas where you intend buying property. Comparing property prices in that area is crucial to establish affordability in terms of rates and taxes, “says Melissa Winter, property agent, and realtor expert.
3. Budget
Setting a budget is another critical step in the process. It's not just about the purchase price; you should also consider ongoing expenses such as maintenance, insurance, Transfer costs are no longer included in the bond, so cash is also crucial to have on hand and property taxes. Hidden costs can catch you off guard, so it's essential not to underestimate them. Remember to factor in additional expenses like closing costs, inspection fees, and potential renovations when planning your budget.
Creating a clear budget will ensure you don't overextend yourself financially and can comfortably manage your new investment.
READ: First-time homebuyers' fears - how to overcome them
An article published on June, 18, 2023, features Paul Stevens, CEO of Just Property, who shares that deferring the dream of owning property, for a year or two in order to save towards a larger deposit will decrease the amount you have to borrow, and the amount you pay in the long term.
What is a deposit? A deposit is usually 10% of your purchase price. It is paid to the transferring attorney or estate agent, who manages it on your behalf until the property registration process is complete.
A deposit will:
- Enhance your affordability and increase the likelihood of bond approval
- Give you leverage when negotiating a more favourable interest rate (due to reduced risk for the bank)
- Minimise the interest you’ll pay over the duration of the loan
- Reduce your monthly bond repayments
- Enhance your attractiveness to sellers
- Improve your negotiating power
4. Don’t rush!
One common mistake is rushing into a decision. It's important not to succumb to pressure and take your time to make the right choice for your circumstances.
5. Insurance
Momentum Insurer’s, Bongani Matlala, Business Development Consultant says, “When buying your property, make sure you search for a good insurance company to associate yourself with. Understanding the purpose of insurance is key to buying that first property as it helps with deciding on the type of cover you require in alignment with your needs and make sure to understand your policy limitations.”
Don’t neglect the importance of insurance. Ensure that your property is adequately insured to protect your investment from unforeseen events, providing you with peace of mind. Lastly, avoid overextending yourself financially. It's crucial not to purchase a property that stretches your finances to the breaking point. A home should be an asset that enhances your financial stability and independence, not a burden that leads to financial strain.”
READ: 6 Reasons why a deposit is important when buying property
More insurance tips:
In a article published on 3 Sep 202, Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, explains the importance of knowing exactly what your insurance covers.
If you’ve done some renovations or improvements, here’s what you should check when it comes to your home insurance policy. To start with, it’s important that homeowners understand the two different types of home insurance:
Buildings insurance.
As the name suggests, this covers the structure of your home and its outbuildings, and their permanent fittings, against fire, damage and theft. If you own a house, make 100% sure you have buildings insurance. Regardless of whether you have a bond or not.
Home contents insurance.
This covers your stuff. If you could turn your house upside down and shake it, what falls out is home contents – clothes, furniture, TV, wine glasses, the lot. A lot of people don’t have home contents insurance.
Do a post-reno buildings insurance review
If you’ve got a bond, it’s compulsory to have buildings insurance. This is usually taken care of by your bank, and the premium is ‘hidden’ in your monthly bond repayment. But you’re not obliged to accept your bank’s quote, and it’s possible you’ll get a cheaper premium from the insurer that covers the rest of your valuables. So do shop around!
Insure for replacement value, not market value
A building’s insured value isn’t its market value. Buildings insurance should cover what it would cost to rebuild your property from the foundations up, including your boundary walls, solar panels, swimming pool, taps and tiles. It should even include what you would need to pay in a worst case scenario, like demolition charges and waste removal, and the professional and municipal fees that are part of the building process.
Review your home contents coverage
If you’ve built onto your home, and filled the new extension with brand-new furniture and appliances, this is a great time to update your home contents insurance as well. As with buildings insurance, the key is to make sure you cover your home contents for their current replacement value – don’t guess. And remember, insurers can only protect what they know about. It helps to keep the original receipts for items like big screen TVs, so that you can prove their value if you need to claim. To help you assess your home contents correctly, here’s a handy home contents inventory.
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