There are many steps involved in the home buying process. Some of these steps are very exciting and others are more complicated. This guide will help you through the steps and make the process a little simpler and more understandable.
Buying a home can be very exciting and might have you so overwhelmed that confusion takes the lead. You have to stay focused so that you can make the right decisions and start with the right steps to avoid disappointment at a later stage.
Step 1: Calculate Affordability
It is the most important step and you have to start here. You have to know what you can afford before you start house-hunting. Use an online bond calculator or contact a bond originator to work out exactly what you can afford and find a loan structure that will suit your needs. Keep in mind that you must not only take your monthly installments into consideration, but also include insurance (household, homeowners and life insurance) and municipal costs in your budget. Your budget should also allow initiation and administration fees, legal costs, bond registration fees and VAT / Transfer Duty.
Step 2: Consider your Needs
Now you know what you can afford, but do you know exactly what you need? Consider the size of the house and the location of the property. Think about accessibility to schools, shopping centers and to your work.
Step 3: Start House-hunting
Now you know what you want and what you can afford. The most exciting part is searching or hunting for the perfect place. Let the hunt begin! There are a few ways to find your dream home:
Browse advertising
Searching on the internet or browsing through local newspapers will help you to get a good idea of the properties available as well as the current going-rate for properties in the areas of interest.
Driving around
If you do not know the city or town you are moving to, it is a good idea to drive around in the various areas to get to know the place. Look for properties with “For Sale” signs outside and write the details of the places you are interested in. If you want to make use of an estate agent, this will help them to get an idea of what you are looking for.
Contact an estate agent
You might want to visit a few local estate agents to find out more about the profile of areas and average cost of houses in these areas.
Step 4: Offer to Purchase
After you found the house of your dreams, you will have to take the next step: Offer to Purchase. Now you can make an offer and negotiate the purchase.
Also have a look at our other pages:
What is an Offer to Purchase and 9 Essential Elements Of Legitimate “Offer To Purchase” Contracts
Step 5: Apply for your Loan
Once you have identified a property and made an offer, you should apply for a home loan for the amount offered. Make sure that you have all the required supporting documents in place and go through this step with the help of your bank or bond originator. These documents usually include the following:
- Proof of income
- Copy of your South African ID or passport
- Copy of offer to purchase
- Proof of current residential address (municipal account, Telkom account or valid TV license).
- Salary earners: most recent salary slip or banking statement for the last 3 months, a letter from your employer which will be followed by a telephone confirmation to your employer.
The approval process can now begin. The bank starts by doing a valuation of the property and going through the documents you provided. If your application has been successful, you will receive a “quote” call within a few working days to confirm the details of your application and accept the terms of the quote. Within 24 hours an attorney will contact you, confirming their fees and making an appointment to sign the home loan agreement.
Step 6: Registration
Congratulations on getting this far! Your home loan has now been approved and the bank will advise the Bond Attorney to register your bond. Upon registration the bank pays out the loan and you become the lawfully registered owner of the property. The transfer process can take 6 to 8 weeks to complete.
Step 7: Moving in
This is the final and most exciting step of the Home Buying Process, moving into your new home!
You always have to keep your budget in mind and stick to it. Make your bond payments on time and if possible, boost your monthly installments and save a huge amount on interest.