Buying a home is a big step that can be just as exciting as it is scary. 22seven knows that searching for, choosing and eventually purchasing property can be overwhelming. That’s why we’re sharing 5 mistakes to avoid when snapping up that new crib.
Not knowing what you can afford
Having a clear idea of your financial position is the first and most important step in the buying process. Be aware of exactly what your monthly expenses are, be realistic about how much spending money you’re willing to forgo and lastly, ensure that you can still save around 10%-15% of your income while repaying the loan. Most property websites calculate the average monthly mortgage for you and your bank will also be able to tell you how much you can afford. Knowing what you can afford will make the process of searching for and buying a home much less stressful.
Purchasing while you’re already in debt
You shouldn’t be in debt when deciding to take up a mortgage as buying a home is expensive and there are several costs to consider. If you’re already in debt you may not get the loan amount you want and you’ll also put yourself in a difficult position for the next couple of years. Make sure you’re debt-free, have an emergency fund (and then some) before you decide to seal the deal.
Underestimating the costs
It’s essential to know how much you would actually have to spend if you go ahead and purchase a home. If you don’t get a 100% loan from the bank, you would have to put down a deposit, which is usually between 5% and 25% of the total purchase price (with 10% being the norm). Even if you do receive a 100% loan, you would still be responsible for paying transfer and registration fees, so it would be wise to have 10% of the purchase price in cash to afford costs not covered by your loan. Legislation has waived the transfer duties of property under R1 million, however, registration fees still apply. Levies, property tax, municipality bills, life insurance to cover the bond and insurance for the building are all bills that you would have to foot in the long run. Remember too, that you’re now the landlord, so all maintenance, emergencies, levies and customisation fees are now your responsibility.
Not knowing how the process works
Purchasing a property isn’t always an easy path. It can be overwhelming if you aren’t sure where in the process your application is sitting and who you’re supposed to provide bank statements to next. Being aware of what’s supposed to happen and knowing the role of key players in the process will help you spot any irregularities and keep you in the loop. You would have to set out some time to collect documents and answer emails as soon as you can to make the process easier for everyone.
Not checking out the neighbourhood
Yes, the house might be perfect but what about the neighbourhood? Do you plan on having kids and if so, is there a decent school in the area? Is the neighbourhood developing and being maintained, or will the house only lose value over time? Can you easily get to and from work and comfortably run to the shops for the essentials? These are all questions to keep in mind before buying a home.
Keeping these five tips in mind will help make your experience of buying a house the enjoyable celebration it should be. A little preparation will go a long way in securing you your dream home.
Written by LisaCroeser