Getting ready to buy your first home can be daunting. Credit scores, down payments, bonds, and so much more are all on your mind. Get ready to make one of the most significant purchases of your life with these savvy financial tips below. It is essential too, to remember that the work of financial planning and budgeting does not stop once you collect the keys to your new home.
The down payment on your home is a critical component of the home buying process. You should save at least 20% of the cost of your ideal home. Some smart ways to save for your deposit include: setting up an automated savings plan, banking any unexpected cash windfalls, building flexibility into your savings plan, as well as determining your timeframe and skipping vacations. If saving towards your down payment is done right, you might be in your first home sooner than you think.
Below are more financial hacks:
1. Pay off all debt and create an emergency fund
Do you know that owning a home could be more expensive than renting? There are so many expenses involved in owning a home that tenants don’t have to worry about. So, before you even think about buying your first home, make sure you’re debt-free and have an emergency fund of three to six months’ expenses in place.
2. Establish how much home you can afford
Timing is everything when buying a home. You have to make sure that you can afford the house of your dreams. Here, the general 30% rule applies. Simply, it means that try to keep your total housing payment under 30% of your gross monthly income. When you spend [much] more than that on your bond payments, you risk becoming ‘house poor’ – living in a beautiful home but finding it difficult to save or even cover other monthly expenses.
3. Prepare your finances
If you can imagine it, you can live in your dream home. But, first, you have to be financially qualified to buy it. To guarantee you’re financially ready to buy your first home, you’ll need a good credit record, to have saved cash for a deposit and other expenses and a verifiable income. Start by collecting documents you will need to verify your finances on the bond application process.
4. Get a home loan you can bond with
This might be one of the most frustrating pre-home buying activities as you go from pillar to post looking for the one financial institution that will give you the most favourable bond repayment terms. Similarly, don’t leave this for the last minute and risk having to see your dream home get taken by someone else who had their financing in order.
Financing your home has never been easier with Bondspark, Leadhome’s property financing partner. They exist to bring financial power to you, the client, and strive to make financing your home the quickest and easiest part of buying a property. Fully online and completely free, Bondspark’s bond origination platform will assist to submit your details to at least seven of South Africa’s most prominent financial institutions. The team is so good at what they do that soon the banks will be fighting for your business. Do not hesitate but contact Bondspark now to find out more.
5. Find a home within your price range and make a competitive offer
After researching your dream home, you will focus on an area and the specific property that you want. Time is of the essence and you should make an offer as soon as you have identified the home you want to buy. As a first-time homebuyer, it may be hard to know how much you should offer. That’s when you can rely on the expertise of a real estate agent.
Your agent can help you make sure your offer is competitive, within your budget and the home’s value. Be careful not to make an impulsive offer that’s higher than what you can afford just to knock out the competition.
6. The homeownership debt trap is real – avoid it
Financial prudence is required now that you have acquired your first property. It is essential to live within your means. Avoid the homeowner debt trap by using the following guidelines:
- Review your financial plan and budget to include your new homeowner status
- Find ways to supplement your income
- Consider taking out a debt consolidation loan
- Set aside enough spare money for home repairs and upgrades
- Consider home, life and disability insurance
- Do not neglect savings for other long-term goals like retirement.
Your first home is a big purchase and you don’t want to risk messing it up. Our real estate professionals will take the weight off your shoulders by helping you to find a home, negotiate a deal, and see the process through until closing. Get in touch!
