Top 10 tips to buying your first home in 2020

LifestyleProperty Trends

Top 10 tips to buying your first home in 2020

12 January 2020 | Insights Team

Buying your first home is a big deal, and maybe one of the biggest decisions you make in your life. We know you don’t want to mess this up and that is why we have compiled our top 10 tips to help you realise your real estate dreams.

1. Are you in this to win this?

For a lot of people, their most expensive purchase is buying a property. And yet, many people enter the process completely unprepared, which may result in a disappointing purchase. 

You need to ask yourself if buying a home is really for you. What is motivating your decision to become a homeowner? What are your plans for the next five to ten years? By looking at this big purchase from every angle, you will be able to make an informed decision. 

Remember, there is nothing wrong with not purchasing a property. Many households around the world are opting to remain in the rental market because of its affordability.

2. How much home can you afford?

If you don’t know what you can afford, you are setting yourself up for disappointment. Being a homeowner is a costly exercise, and maybe not the cardio you were hoping for, so you have to be in good financial shape. Luckily there are some nifty online tools to help you calculate how much home you can afford.

The affordability amount that is calculated is based on the accuracy of the information you provide, but the bank looks at more than just your affordability to qualify you for a home loan. They also look at your creditworthiness to get an idea of what you have done with your money in the past – especially the money you have borrowed. 

Once you know what you can afford – stick to your budget and rather opt for something smaller in a slightly better area.

3. Know thy credit score

In South Africa, your credit score will range between 300-850. Most credit scores fall between 600-750, but a score above 700 is generally considered good.

When applying for a home loan, your credit score is viewed in conjunction with your credit profile. Because a credit report shows the bank how you handled your debt in the past. Notice how working towards your home loan actually starts a long time before you get to enjoy your dream home?

Did you know that the National Credit Act entitles consumers to one free credit record check during a 12 month period? Go on and take advantage of this!

4. Understand all the costs

Speak to homeowners you know to find out what their monthly costs are outside of their home loan repayment. Do research online. Find out what the rates and taxes are in the area you want to move to. Make sure you are aware of all the additional costs involved with buying a property, for example, transfer fees and bond registration costs.

If you are buying in a sectional title complex, you are well within your rights to ask for the financial statements to ensure that the property is well maintained and in good financial standing. Also, ask about any special levies. A special levy is a tariff charged in addition to the normal levy over a fixed period.

You can also take out some of the financial uncertainty by getting a home loan prequalification certificate. A home loan prequalification is a certificate that compares your monthly income and expenses with your credit profile and helps you determine what amount you could qualify for.

5. Save for a (nice, big, fat) deposit

There are a lot of benefits to saving up for a big deposit. You will have less to pay off on your home loan, and you will increase your negotiating edge with the bank. 

If you are not in the habit of paying yourself first – then you should start! Waiting for the end of the month to see what is left to save will make it much harder to reach your savings goal. And don’t tempt yourself to save even less – automate your savings to go off as soon as you get paid. 

Another great idea to help you shift your spending habits is to pay with cash instead of credit for discretionary purchases.

6. Inspect what you are buying

In your search for your dream home, you may view a lot of properties. Don’t buy in haste, but do look past the furnishings and check for defects like signs of damp. Is the roof sagging? Are there any structural cracks in the walls?

Do your future self a favour and hire a home inspection service company to inspect the property before you submit your offer. Home inspectors check for everything from structural damage to faulty electrical installations and hazardous materials.

You can learn a lot about an area by looking at homes for sale – even if they are not exactly what you are looking for. Get up and go check them out. Once you find the place you love, you’ll know how it compares to better or worse properties in the neighbourhood.

7. Repay more than you need to on the home loan

A home loan may be the biggest debt you take on in your life, but even though it is a long-term commitment, you can pay it off a lot sooner by depositing extra money every month. It takes willpower, but it won’t be long before you start reaping the benefits. 

If you get a raise at work, increase your monthly home loan repayment contribution. Don’t treat your bonus and tax returns like lucky money to spend on irresponsible things, just dump it in your home loan.

8. Additional income possibilities

A cottage or granny flat is a great way to earn some passive income. If there is room in your budget, why not explore this option? 

These additional spaces, especially when they have a kitchen and a bathroom, can also serve as accommodation for older relatives. Your real estate agent should be able to advise on the demand for cottage accommodation in the area.

9. Don’t be hasty

The last thing you want to do is rush the process of finding a place to live. Buying a home is an emotional process, but don’t let your emotions take over. Homeownership has many far-reaching implications, and that is why it is critical to make a rational decision. 

Take your time and think about what is fixable and what is not. Things that are difficult to change include location and size, but you can change the colour of the walls in the bedrooms. Maybe you don’t have the money to do it immediately, but it might be worthwhile to live with the ugliness so you can get into a property you can afford.

10. Stalk the neighbourhood

If you can view the property, you are interested in at different times of the day and the week, do so! Many buyers are often disappointed once they move into a neighbourhood because they didn’t conduct enough research.

Head out to the area morning, noon and night. Join community groups on Facebook and check out what people have to say about the area. 

Empower yourself with knowledge and become an informed buyer. This will enable you to confidently make a home buying decision that is good for both your feelings and your finances.

Want to look at properties for sale? Check out our listings over here.

Insights Team

We're the "thinking arm" of Leadhome, combining expertise in data analysis, modelling, sociology, geography, and philosophy to interrogate current trends in the South African residential property market. Proudly contemplative since 2015.