Homeownership is a milestone that most people aspire to achieve and while there are several benefits to owning a property, it is vital that they are 100% ready and prepared for the responsibilities that come with homeownership.
Finding your dream home and navigating the property purchasing process are just some of the considerations potential home owners will need to take into account. There are several factors that need to be considered carefully before you can be certain that now is the right time to buy a home.
For example, you need to know if you are able to take on the responsibility of maintaining a property or paying for something if it needs to be repaired. As a homeowner, there is no longer a landlord to rely on.
Here are some of the biggest considerations you need to mull over before you sign an offer to purchase:
Living arrangement considerations
As a buyer, there are a multitude of costs you need to be aware of that includes a deposit, as well as the bond costs and attorney fees, insurance, and the general upkeep of the home.
So if you are thinking of buying a home and only staying short-term then it obviously doesn't make financial sense to purchase a home. Ideally, a buyer should be planning to either stay in or hold onto their property for a period of at least seven years, but preferably longer. This will give you time to pay a large portion on the bond and hopefully for the home’s value to appreciate enough to see a return on your investment when you sell.
Consider your future plans and where you see yourself in the next five to ten years. If you are ready to settle down in one place for a long period, you might just be ready to buy.
The large majority of South Africans will be loan-dependant when buying a home. What this means is that their home buying ability will be subject to bond approval with a bank.
A buyer’s bond approval success will be based on their level of affordability, which is affected by their debt to income ratio. It is best for a potential buyer to pay down their debt as much as possible before applying for finance.
You should focus on creating as big a gap as possible between the money you earn and the money that is paid out to expenses and debt. It is important that you don’t make any large purchases during this time, such as buying a new car, for example.
Pre-approval through a bond originator is an excellent way for buyers to determine how financially ready they are to own a home or what they may need to do to get there.