Com­mon first-time home buyer mis­takes

Lesotho Times - - Property -

PUR­CHAS­ING your first home is an ex­cit­ing time in life, but it can also be a com­plex process that re­quires a lot of re­search.

Al­ber­tus Van Staden, Head of Credit at FNB Hous­ing Fi­nance ex­plains some of the most com­mon mis­takes first-time home buy­ers tend to make.

Af­ford­abil­ity

Af­ford­abil­ity will of­ten throw a first-time home buyer off be­cause it is not a sim­ple cal­cu­la­tion.

“Of­ten first-time buy­ers are overly op­ti­mistic about their af­ford­abil­ity,” says Van Staden. “Merely tak­ing your in­come into ac­count is not an ac­cu­rate assess­ment of your af­ford­abil­ity, as there are ex­penses that will have to be main­tained along with your bond re­pay­ments.”

Be­fore start­ing to look for a home, po­ten­tial home own­ers should get an in­di­ca­tion of what loan they qual­ify for.

Fi­nan­cial in­sti­tu­tions can of­ten pre­qual­ify cus­tomers. FNB’S own on­line tool will as­sess and per­form a credit check, giv­ing buy­ers a pre-au­tho­rised amount to en­able them to know how much they can buy for.

“Don’t be dis­ap­pointed if the amount you qual­ify for is less then you thought, this is to en­sure that you can com­fort­ably af­ford a home loan and avoid get­ting into fi­nan­cial dif­fi­culty later in life,” says Van Staden.

Own­ing a home means ex­tra ex­penses

The bond is not the only ex­pense that comes with own­ing a house.

“Once you have suc­cess­fully bought your house, you will need to be prag­matic about do­ing things like fur­nish­ing your home. It is not wise to take out credit to fur­nish your new home.

“You will need to do this in­cre­men­tally, so that you can keep up with your bond re­pay­ments and all the ad­di­tional costs re­lated to your home,” cau­tions Van Staden.

Other ex­penses that will need to be con- sidered and bud­geted for in­clude mu­nic­i­pal­ity rates, taxes, in­sur­ances and levies.

The type of prop­erty has an im­pact

When pur­chas­ing your home it is im­por­tant to note the dif­fer­ent types of prop­er­ties and how they will af­fect your fi­nances once you are a home­owner. For ex­am­ple, when you pur­chase a sec­tional ti­tle you are buy­ing a unit in a com­plex or a de­vel­op­ment.

“Sec­tional ti­tles are con­sid­ered a more af­ford­able op­tion be­cause you would pay a fee of­ten re­ferred to as ‘levies’ that goes to­wards cov­er­ing your home in­sur­ance and the gen­eral main­te­nance of the com­mon prop­erty for the whole com­plex.

“How­ever, this is dif­fer­ent for some­one that chooses to pur­chase a free­hold prop­erty, which is a free­stand­ing or a clus­ter house, as they would have to main­tain their prop­erty themselves,” ex­plains Van Staden.

In ad­di­tion, there are rules for the sec­tional ti­tles and it would be wise to know these be­fore pur­chas­ing this prop­erty.

“If you want to ren­o­vate your home, of­ten sec­tional ti­tles have re­stric­tions to what home­own­ers can do to their homes and they have to abide by the rules of the gov­ern­ing body of the com­plex.

“This is not al­ways the case for a free­hold prop­erty, bear in mind that some res­i­den­tial es­tates also have lim­i­ta­tions on what can be done on free­hold prop­er­ties,” adds Van Staden.

Buy­ing is not al­ways the an­swer

Ac­cord­ing to Van Staden, when some­one gets to the stage of buy­ing their first home, prac­ti­cal think­ing is some­times over­ruled by the ex­cite­ment.

Pa­tience will mostly work in your favour. Rather en­sure that your fi­nances and per­sonal cir­cum­stances are com­pletely stable.

“Don’t rule out rent­ing com­pletely be­cause it has var­i­ous ben­e­fits. You can save up for a de­posit to en­sure that when a good deal comes along you will have a very good chance to se­cure the mort­gage and the house that you re­ally want, in an area that you have thor­oughly re­searched,” says Van Staden. — Prop­erty24

Pur­chas­ing your first home is an ex­cit­ing time, but it can also be a com­plex process that re­quires a lot of re­search.

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