The challenge of buying a home for the first time can seem so daunting that it's tempting to either just go with the first place in your price range or continue to rent. To help you demystify the process and get the most out of the purchase, Just Property have come up with a guide as to what you can expect from the buying process itself, and some handy tips to make life easier after you purchase your first home.
Choosing a Home
The first step is always to decide which area you would like to live and what price range you are looking at. With that in mind, it’s time to consult reputable real estate agents that specialises in your area.
"The area expert should be well-known with a sound track record, who can provide you with useful and relevant market information (prices achieved, future prospects etc) as well the processes involved in purchasing and selling a property” says Paul Stevens, CEO of Just Property.
"Buying or selling a home is a contractual transaction with several legal documents involved. It therefore makes sense to work with a professional who can explain everything to you and ensure that you’re taking the right steps”.
Your real estate agent can advise you on whether your requirements and price range are realistic for the area of your choice and, if not, can suggest alternatives.
Types of Home Ownership in South Africa
Simply put, freehold means that you own a piece of land and everything on it. You will be required to pay rates to the municipality based on the value of the land and buildings.
Properties such as townhouses and flats are usually registered under "sectional title". In this case you own the "inside" of the house only, up to and including the ceiling. The outside of the house, the land on which it is built, as well as boundary walls, the roof, outbuildings and the like are owned by the "Body Corporate" on behalf of the individual owners.
Share block is another form of property ownership, which typically applies only to a small number of blocks of flats. In this case the whole property is registered in the name of a company. The Purchaser becomes a shareholder in the company, and in terms of a "User Agreement" is entitled to occupy a particular flat (unit) and "proof of ownership" is a share certificate instead of a title deed
Whether the property is a freehold, sectional title or leasehold, it has a "Title Deed", a document which identifies the location and size of the property as well as the particulars of the owner. Every time the property changes hands this document must be presented to the Deeds Office in that region, and a new title deed issued in the name of the new owner.
The Costs of Buying a Home
As well as the purchase price, there are a number of other big expenses when you buy a home. Transfer Duty and the transfer costs may be your biggest expense in purchasing your property. Transfer Duty is paid to South African Revenue Service every time a property changes hands.
If you take out a loan to buy your home, there is also the cost of registering the Mortgage Bond. This is the document confirming the mortgage which registered in the Deeds Office. There are also other smaller costs that you may need to allow for e.g. the lender's administration fee. Be sure to ask your lender for a breakdown of all the costs you will be expected to pay.
Applying for a Home Loan
Immediately after you have signed the contract, make your application for a home loan.
When you are buying a home, financing your new home is one of life‘s major investment decisions. A reputable lender (Banks, SA Home Loans, etc) will help you with the application, explain everything you need to know, advise you how much you need for costs, and confirm your likely monthly instalment.
They will ask you for your identification, your latest payslip, bank statements, proof of any housing subsidy, and a copy of the sale agreement. All mortgage lenders will do a credit check on you to ensure you have an acceptable credit record.
The lender will also assign an independent valuer to assess your property. This is to ensure that the loan amount that has been requested is supported by the value of the property.
“Be sure to disclose your true state of affairs in your loan application, to enable lender to make a fair assessment to determine whether you will be able to afford your loan repayments. Note that all Lenders are obliged to comply with the terms of the National Credit Act” cautions Paul Sevens of Just Property.
Your new Home
Once the registration and transfer process is completed (8 0 10 weeks without unexpected delays). The seller will also have to provide you with an Electrical Clearance Certificate, as well as a document stating that the property is pest-free.
After that it only remains for you to organise a moving date and being packing!
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