Having your own garden, garage, braai area and a place to call home gives you peace of mind, doesn’t it? Owning a home is indeed also considered a privilege, but there are things to take note of before you can even think of buying a house.
Here are some considerations and certain questions you need to ask yourself, before buying a home / applying for a bond:
Credit Profile
Do you know what your current credit profile looks like? If you have no idea, don’t you think it is about time to ‘get to know’ your credit record? Visit TransUnion, XDS or Experian.
It is better to do the inquiry yourself. Do not ask the bank what your credit record looks like – you have to make sure you get the best chance to get approved for a bond.
Monthly Budget
What about your month-to-month budget? Will you have enough money for your monthly bills, living expenses, and a bond or will you barely make ends meet?
Do you have a monthly budget on your phone, computer or the fridge to indicate if your cash flow is healthy? If not, first things first, start making use of DebtSafe’s template or try a phone app like 22seven.
Bond Payment
How much money will you need for a bond payment? A bond calculator will indicate the loan amount you need to budget for, for example, SA Home Loans. You will have to make sure you are able to pay the bond and other expenses.
Say your bond is R10 000 a month, you’ll need an extra 20+% for property rates and taxes, hidden expenses like levies, waste management, water and electricity, sanitation, emergency repairs and maintenance on your new house as well.
The installment basically determines what the affordability amount is.
Saved Up Cash
Will you be able to put down a deposit if the bank does not finance 100% of your bond?
Have you saved enough money for the conveyance cost, postage and sundries, deeds office registry fee, initiation fee, transfer fee and administration fee (see the complete list via FNB) that are not included in the bond?
Debt Status
How much debt do you currently have? The bank may say that you are over-exposed.
Your house, debt and everything else must not be more than 60% of your disposable income.
Interest Rates
Take note: interest rates will vary based on the repo rate. You can opt for a fixed rate, but this will include a higher tariff.
Are you currently sitting on a seesaw and pondering whether you should buy a house or not? Remember: if you are struggling to pay your current bills, buying a new home will only contribute to your money woes. You, therefore, have to be 100% certain that you can afford a home. You’ll know it is time to ask the above questions when your budget is well in balance and when you don’t want to rent anymore. Remember, if you are in a good financial position and you want to buy a house, depending on the area, your bond payment can be lower to pay off on your own home instead of spending that money on rent for someone else’s house. It is, therefore, an important decision to make, so be mindful and consider the pros and cons carefully.