Don’t wait until you are ready to buy before starting to look at what is available. Obtaining as much information as possible will empower buyers with the knowledge of determining a good investment from a bad one.
Adrian Goslett, CEO of Remax of South Africa, says having clear-cut goals is especially important for consumers who have made the resolution to become homeowners in 2014.
He says with the goal of homeownership in mind, potential first-time buyers should focus on five key areas to ensure that their dream of owning a property becomes a reality this year.
16 Jan 2014
Don’t wait until you are ready to buy before starting to look at what is available. Obtaining as much information as possible will empower buyers with the knowledge of determining a good investment from a bad one.
Adrian Goslett, CEO of Remax of South Africa, says having clear-cut goals is especially important for consumers who have made the resolution to become homeowners in 2014.
He says with the goal of homeownership in mind, potential first-time buyers should focus on five key areas to ensure that their dream of owning a property becomes a reality this year.
- Ensure your credit score is good
With most first-time buyers reliant on banks for finance, it is important that their credit record is clear and that their credit score is within the necessary level to obtain the finance they require.
While the Credit Amnesty Bill will clear consumer’s credit records from any defaults they may have, a consumer’s credit score will still have an impact on the interest rate that banks are willing to give the borrower. As most credit bureaus provide a free annual credit report to consumers, the new year is a great time to go over your credit score and see where it can be boosted or dispute any errors that may be reflected.
Goslett says with affordability being a factor and consistently high levels of debt-to-income ratios among South African consumers, it is vital that potential property buyers pay down their current outstanding debts and avoid any big-ticket purchases such as cars or furniture.
If possible, he says consumers should rather stay away from applying for any new credit to ensure that their debt-to-income ratio is favourable. He says even if no items are bought, an enquiry can also impact negatively on a consumer’s score, so it is best not to apply at all.
He says a consumer’s capacity for acquiring more debt and opening an additional credit account could adversely impact on their ability to obtain bond approval.
- Saving is key
It’s no secret that most buyers will be required to put down a deposit when applying for bond finance. Goslett notes that on average, banks will ask buyers for a deposit of between 10 and 30 percent of the bond amount required to secure approval.
While loan approval without a deposit is sometimes possible, it is more the exception than the rule in today’s market. Having a deposit will vastly increase an applicant’s chances of approval and can positively impact on the interest rate given. Where possible, cut down on unnecessary expenditure in order to save as much as possible because every little bit will make a difference.
It is also important to remember that it’s not just the deposit that consumers will be saving for, but also all the other expenses that coincide with a property sales transaction such as legal fees and transfer costs, never mind utility accounts and the like.
- Work with the best estate agent for you
Goslett says working with the right real estate agent will vastly change the home buying experience for the better. “There are a few things that home buyers should look for when selecting an estate agent that they want to work with. Firstly, the agent should be from a reputable real estate brand with a network of real professionals at hand to assist where possible. The agent must also be an area specialist with a solid working knowledge of the suburb in which the buyer is interested in buying in.”
Goslett says it’s important that the buyer feels comfortable with the agent and that all parties communicate effectively with each other so that no time is wasted by the agent showing the buyer properties that don’t meet their criteria. If in doubt, he says the buyer can request that the agent provides them with recent testimonials and references from happy clients.
- Find out how much you qualify for
According to Goslett, buyers will be able to find out what they can afford and what they qualify for before applying for finance through a bond originator such as Betterbond or their bank.
He says buyers will need to consider what they can afford and sustain over the term of the loan before making any commitments. There are many resources that will be able to assist buyers with precisely assessing their financial situation such as financial advisers, banks and bond origination companies, he says. This will give the buyer estimated repayment figures based on bond requirements, says Goslett.
As a general rule, monthly bond repayments cannot be more than 30 percent of total expenses, he explains.
- Find the perfect home
Potential buyers should be reading and researching as much as possible. “Know the market, know the areas that you want to live in and know the type of home you are looking for. This will cut down choices and assist in narrowing down and pinpointing the perfect property.”
Goslett says don’t wait until you are ready to buy before starting to look at what is available. Obtaining as much information as possible will empower buyers with the knowledge of determining a good investment from a bad one, he says.