If 2025 is the year you buy your first home, start preparing now.

The interest rate cuts made by the South African Reserve Bank in 2024 are good for the property industry and the economy is anticipated to benefit from these and further anticipated cuts in 2025. But thus far, homeowners haven’t yet felt a substantial decrease in their monthly repayments. More cuts and/or less conservative cuts this year will help with how far consumers’ salaries stretch at the end of each month and these will further kickstart the economy in favour of all consumers.

They’re also anticipated to create more favourable property market conditions in the months to follow, which is where first-time homeowners can reap real benefit. If you’re hoping to buy a property in 2025, use this rate reduction to your benefit while you consider the following:

Take the time to improve your credit score

A good credit score is essential for securing a favourable home loan. Ensure your credit history is in good standing by checking it with bureaus. Lenders are willing to extend credit to consumers with a “Good/Excellent” credit score. This score clearly indicates that a consumer is financially disciplined and will repay borrowed money. Whilst lenders may still consider credit for consumers with a “Fair” credit score, by boosting a “Fair” credit score to “Good/Excellent”, you can unlock better home loan offerings from banks, negotiate lower interest rates and be assured of more home loan options to choose from.

If you’re waiting for rates to reduce further, or more properties to come onto the market, you can do the following in the meantime:

  • Improve it by paying off debt and managing credit responsibly. Don’t miss any credit payments, and catch up on overdue accounts, which should be easier to do with lower rates anyway.
  • Keep debt repayments at the maximum you can afford to pay when rates continue to reduce.
  • Keep credit account balances low (after the festive season, this is easier).
  • Limit the opening of too many new credit accounts.
  • Maintain a healthy mix of credit, e.g., retail store accounts, credit cards, and service contracts such as cell phone accounts, to establish a strong credit history.

Read more here.

Understand the market and trends, work with professionals

Keep an eye on current real estate trends in South Africa, such as property price fluctuations, interest rates, and buyer demand. In the new year, monitor the impact of factors like economic policy changes, inflation, or urban development plans. You can do this by keeping abreast of news and reading relevant publications and talk to property practitioners that you trust in the areas in which you’re hoping to buy. They’ll be able to tell you what property trends they have experienced and what state the property market is in. This is a good start to gauging your affordability. Be sure to choose reputable agents with good knowledge of your target area.

Other professionals that you might need once you’re on your home-owning journey are conveyancers, you’ll need a conveyancing attorney to handle the legal transfer. Property practitioners and banks will select these for you, but you’re also able to use your own if you have one you trust.

Also consider contacting Home Inspectors, who you can call on to get properties inspected to identify any potential (hidden) issues. These range from electrical to structural specialists, and their input while house hunting is invaluable in the long term to confirm you’re making a sound investment. Read more here.

Choose your location and non-negotiables before starting the property hunt

Location significantly impacts property value and future growth, and you no doubt already have a good idea of where you want to live (or invest). Consider:

  • Proximity to work, schools and amenities.
  • Safety and security of the area.
  • Potential for property appreciation. Neighbouring suburbs where property prices are possibly cheaper or there may be more potential for growth.

Make sure you know what you really want in a home, in terms of features, and list these so you’re not tempted to stray too far from your preferences. Being flexible is one of life’s gifts, and one you’re most likely to benefit from when rates reduce and borrowing becomes cheaper, and better homes become more affordable to you. 

Remember the golden rules:

  • Everything is negotiable. Be willing to negotiate on the price and terms and walk away if it’s not the right deal.
  • Be patient, don’t rush into a purchase just because you believe you might miss out on the best deal (there’s always another property).

Understand your finances, plan for rate fluctuations and do a pre-approval through your mortgage originator

The starting point for this journey is answering the important “What home can I really afford?” question. If you don’t have one already, it’s time to draw up a budget.

Do you have money saved for a deposit? Aim for a deposit of at least 10–20% of the property price to secure better loan terms, but banks are willing to grant 100% bonds to first-time homeowners. You’ll also need to have cash available for the hidden property costs such as transfer duty (if applicable), bond registration fees and legal fees. The monthly costs of owning a home are always more than you anticipate, be sure to factor in bond repayments, rates, taxes, insurance and maintenance. Read more on these here.

Interest rates will fluctuate, these changes impact your monthly bond repayments. Leave room in your budget for potential rate hikes to be sure you can handle the eventuality when rates go up again.

Chat to one of our Home Loans Specialists about how to do a pre-approval if you’d like to purchase a home this year. A pre-approval costs you nothing, doesn’t impact your credit score and is quick to do. The outcome thereof should make your home-buying journey feel less daunting. Start your pre-approval now. Bond originators can negotiate with multiple banks on your behalf to get the best interest rate, often saving you money and time once you eventually buy your dream home.