CEO's Message Nov 2017
Category CEO's Message
According to financial institutions, more than half of those entering the property market right now are first time home owners. That means that the support and guidance of our estate agents is more important than ever. After, all buying a home is probably going to be your biggest and most significant financial decision. It’s important that you ensure that you really enjoy owning your own home and don’t find yourself battling to come out at the end of each month.
We believe that going back to budgeting basics is just as important for newcomer to the market as it is for those considering buying a bigger family home or downsizing. You may not have encountered some of the challenges encountered by today’s buyers when you were last active in the property market.
A good place to start is always at the beginning with your financial health.
I often advise those who are considering buying their first home to plan at least two years ahead. To afford a good property and to even qualify for a bond in today’s tough market, you need to be in good financial health.
That means you need to have a good credit record when it comes to servicing debt. This not only means that your need to have a credit record via cell phone account, car repayments or clothing accounts but that you need to pay these in full and on time.
I’d also like to urge you to check your credit record. We’ve often had to share the disappoint of buyers who have found their dream homes only to find that they have been blacklisted because of an unpaid doctor’s bill and cannot get a bond. Remember, South African can check their credit score for free once a year through a credit bureau. Make sure that you do this as soon as possible because, if all is not well, it can take time to put things right.
The next question is, even if your track record is as clean as a whistle, can you afford a home and would you qualify for a bond? A simple budgeting exercise is a good start. Add up any and all income you get each month and then list your expenses. Include everything from the obvious ones like rent, food, car repayments and insurance to clothing, entertainment and petrol. This will not only make you aware of how much you can afford but also highlight those hidden expenses.
I suggest that you use this to determine how to prepare to buy a home – can you afford to save for the 10 to 20% deposit required by most banks, for example? If you already own a home, can you save for the additional amount needed for a deposit should the sale of your current home not cover it?
Also remember that you will have to save for additional expenses. Your Tyson agent can provide the finer details but a basic summary is that these include transfer duty on properties worth over R900 000, a bond registration fee and an initiation fee.
Secondly, crunching those basic budget numbers will give you an idea of what sort of repayments you can afford and, with the help of your agent, what price point to target. Take into account that your costs could escalate with a new or bigger property. If you are moving from a freehold home to an estate, you will need to factor in a monthly levy. If you are moving to a larger house with a pool, your electricity bill will go up.
If you realise that your budget won’t stretch to the property you’d like, you can then make adjustments and reduce unnecessary expenses and pay off debts to bring everything in line.
Once you have worked out what you can pay, try practicing. Pay the difference between what you are paying now and what you expect to be paying into a savings account. This will not only get you in the habit of spending that amount but also help you save towards your deposit.
When you are closer to beginning your house hunt, I suggest that you go on line and complete a prequalification for a home loan. Knowing how much funding is available will allow you to shop sensibly.
A pre-approved bond also gives you and your Tyson agent far more bargaining power. It’s a tough market and many sellers would be happy to negotiate to expedite a quicker sale.
Most importantly, you need to realise that having a great agent by your side is a huge asset. We look forward to being there for you.
regards
Chris
Author: Tyson Properties
