By Niki Jackson
Some people believe that life is all about timing. If you have been thinking about gaining a foothold in the property market, that timing could be now. According to the experts, several aligning factors are creating a positive environment for first-time buyers, amongst these, interest rates which are at historic lows and banks that are competing for mortgage business.
Mortgage originators, ooba, announced earlier this year that they had recorded the highest home loan approval rate in over a decade. Added to this, banks are in some instances willing to grant 100% bonds without requiring a deposit – with average deposits of 12.5 percent required for first-time buyers in Q1 this year, reduced from 14 percent in Q1 2017. Even this is a marked difference from the 20% deposits so commonplace just a few years ago.
The Know spoke to several specialists at Pam Golding Properties who say that while the economy may be subdued in general, many opportunities currently exist within the R2million to R1.5million mark and below, a price band that is well-suited for first-time buyers.
We’ve collated expert advice, for these first time property purchasers from almost every corner of South Africa, into a list of practical tips:
- A property purchased using a bond is forced saving over time.
- You benefit from capital appreciation of your asset, enabling you to trade up in the future.
- Always keep within your budget. Rather buy something smaller in a slightly better area.
- If affordability permits, try to acquire something with a granny flat or separate entrance that you can rent out.
- If possible, stay in the home for five years before selling, to benefit from capital growth.
- Ask your estate agent to explain all the costs to you upfront. There are transfer costs, monthly mortgage repayments, rates, municipal tariffs and levies.
- Ask your agent to give you an estimated timeline for the transfer process.
- Check with your agent whether you are liable for occupational rent or not.
- Remember that transfer costs are payable before transfer and this liquidity is probably not available in your bond. Also, the seller needs to settle all outstanding municipal rates in order for your transfer to take place.
- You will need to pay a pro-rata portion of the rates in advance.
- If you are buying into a sectional title development, ask to see the financial statements.
- If you are buying into a security estate, ask for the estate rules.
Perhaps most importantly, remember that property investment has always stood the test of time and an experienced Pam Golding Properties estate agent will be able to provide sound advice and carefully guide you through the complicated process of buying your first home.
