Tips for first-time home buy­ers

Lesotho Times - - Property -

BUY­ING your first home can be an ex­cit­ing time, but if you are not pre­pared, you could find your­self over­whelmed by all the red tape and pa­per­work in­volved.

If you’re think­ing about home­own­er­ship then you should ask your­self the fol­low­ing ques­tions: Am I com­mit­ted to stay­ing in one lo­ca­tion for at least a few years, am I pre­pared to deal with home main­te­nance is­sues such as gar­den work, pest con­trol and other house­hold re­pairs; have I saved enough for a de­posit, mov­ing ex­penses and the ad­di­tional costs as­so­ci­ated with home­own­er­ship such as rates and levies, home in­sur­ance and wa­ter and elec­tric­ity; have I cleaned up my credit score, and are there any out­stand­ing debts that I have to pay off?

If you can an­swer favourably for each of these ques­tions, then it’s safe to say that you’re se­ri­ous about own­ing your first home.

1. As­sess your af­ford­abil­ity and credit his­tory From the be­gin­ning of the home-buy­ing process, it is es­sen­tial to en­sure that you are house hunt­ing within the right af­ford­abil­ity bracket. Banks cal­cu­late af­ford­abil­ity based on dis­pos­able in­come af­ter de­duc­tions and ex­penses. Your dis­pos­able in­come must be more than 30 per­cent of your gross monthly in­come for banks to ap­prove a home loan. Use an af­ford­abil­ity cal­cu­la­tor to work out a re­al­is­tic buy­ing price.

Your credit his­tory will be as­sessed by the bank to en­sure that when you’ve bor­rowed money, you’ve paid it back and that your credit his­tory is clear.

You can im­prove your chances of get­ting ap­proved by get­ting pre­qual­i­fied. Pre­qual­i­fi­ca­tion puts ne­go­ti­at­ing power in your hands. This is a quick ap­pli­ca­tion re­sult­ing in a certificate which shows the type of deal, bond amount and in­ter­est rate you could ex­pect to be of­fered when you ap­ply for your home loan.

Karen Karam, Re­gional Sales Man­ager for ooba, says pre­qual­i­fi­ca­tion al­lows the first­time home buyer to know ex­actly what is af­ford­able and to bud­get bet­ter for ad­di­tional costs such as le­gal fees, trans­fer du­ties, bond reg­is­tra­tion fees, bank charges and in­sur­ance fees. She says when you are armed with a pre­qual­i­fi­ca­tion certificate, you have the con­fi­dence to ne­go­ti­ate a bet­ter buy­ing price from the seller.

2. Use your home loan wisely Given cur­rent eco­nomic con­di­tions, it might be wiser to weigh up the pros and cons of tak­ing the max­i­mum amount the bank has ap­proved you for or to go smaller and make bond re­pay­ments more af­ford­able.

Avoid bor­row­ing as much as you qual­ify for, as tempt­ing as this might be, and rather take a long-term view, keep­ing in mind fluc­tu­at­ing in­ter­est rates and your available cash flow.

Be sure that what­ever you do, it’s within your com­fort zone. This is a de­ci­sion only you can make. Hon­estly ask your­self the fol­low­ing ques­tions:

–– Would you rather be con­ser­va­tive and fairly cer­tain that you can make your bond pay­ment with­out be­ing stretched fi­nan­cially? –– Is now the right time to be buy­ing? –– Is your fi­nan­cial pic­ture look­ing healthy? –– How does your credit sit­u­a­tion look?

3. Main­tain­ing a clean credit record Once you have moved into your new home, make sure that you main­tain good re­la­tions with your bank by mak­ing pay­ments on time. Re­mem­ber that the bank will hold you ac­count­able for your home loan un­til you have set­tled it and the own­er­ship of the house has been trans­ferred to you. 4. Put aside an emer­gency fund for those un­ex­pected costs such as plumb­ing, tyre bursts and gen­eral main­te­nance costs. An emer­gency fund will pre­vent a sit­u­a­tion where the home loan fund is used for other ad hoc costs. To save costs, main­tain the prop­erty reg­u­larly. –– Prop­erty24

as a first-time buyer you should be do­ing as much re­search as pos­si­ble.

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