Step-by-step process of buying your property, for first-time homeowners.

Buying property is something we all dream about, it’s a way to provide a safe and comfortable home for you and your family. With the added benefit of building long-term wealth, it’s something South Africans aspire to do from the time they earn their first pay cheque.

Is buying your first home really as daunting and scary as we all think it is though? If you understand and follow these simple steps, it needn’t be scary, nor a distant dream for you.

Step 1: A-for-Affordability

If you’re serious about making that jump from tenant to homeowner, the first and most important step in the process is to critically assess your financial situation. Taking on long-term debt over twenty to thirty years is a huge financial commitment, and one you shouldn’t do on a whim. Ask yourself the following questions:

  • Do you have a nest egg saved for a deposit? It is preferable to pay in a deposit, but banks will lend you up to 100% of the purchase price, especially if you are a first-time buyer.
  • Can you afford to pay the upfront costs of buying a home?
  • Can you afford the monthly cost of a home loan – i.e. the installment you’ll pay to the bank every month for the duration of your home loan term?
  • Can you afford the other monthly costs that come with owning a home – i.e. rates and taxes, levies if in a complex, water and electricity, insurance and ad-hoc maintenance?

If you’re able to answer an emphatic ‘yes’ to all these questions, it’s time to move onto the next step. If not, it might be the wake-up call that you need to relook your monthly expenses and household budgets. For a realistic expense budget of how much owning a home costs, chat to friends and colleagues to help you estimate these various costs.

If you haven’t already done so, this is when you should calculate how much you can set aside monthly to build up a nest egg for a deposit and the upfront costs to secure your new home. Use our bond repayment calculator to get an estimate of what the monthly instalments are likely to be on a specific bond size (taking a deposit into account or not), and what the total transfer and bond costs will be. Bond Repayment Calculator.

Step 2: Get Pre-Approved

Once you’ve looked critically at your financial situation and assessed what savings you have available for the deposit/costs, chat to our team of Home Loans Specialists about how to do a pre-approval.

A pre-approval from GetGo Home Loans takes a snapshot of your current financial situation and calculates how much additional debt you can realistically take on in order to finance a new home. It looks at your net income (i.e. what gets paid into your bank account on a regular basis) and total expenses and calculates what size home loan a bank may be willing to offer you.

Your credit score is also an important check in this calculation as it indicates how well you have paid off your existing debt in the past, and if you’re a low-risk customer to a bank.

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.

Step 3: Start the Property Hunt

Armed with your pre-approval from GetGo Home Loans, you’re now able to start looking at properties that you can afford. Most house-hunting journeys start on property portals and setting your search criteria upfront with alerts for new properties means that the right homes effectively come looking for you.

Think through these things to make the house hunt easier:

  • What suburbs would you LOVE to live in? And what suburbs around those would you be willing to live in (maybe homes are cheaper there)?
  • What features are essential/non-negotiable in your dream home? And what are the nice-to-haves? Make sure you have listed these separately.
  • What is your price range? This is where your pre-approval and budget calculations become relevant – and resist the temptation to stray above your affordability range.

Once you’re alerted to properties for sale, it’s time to meet some property practitioners and visit some homes. But stay true to the list that you’ve made and be firm about what is important to you. Continuing to pay the monthly instalment on your home in tough financial times should be your most important consideration.

Step 4: Make an Offer

On average, it takes prospective homeowners between three and six months to buy a home, so being patient while you actively house hunt is important. But once you find the home that ticks all the boxes, and you’re confident you can afford it, don’t delay in making an offer to purchase it. It’s unlikely that you’re the only one with your eye on a specific property, so be sure to make a realistic and fair offer upfront (your property practitioner will guide you through this process). Be prepared to negotiate if you really want the house (and can still afford it if you need to increase your offer). Offers are time-bound and only valid for a few days, so you won’t have to wait long once your paperwork goes to the seller. Make sure to read the fine print on the offer to purchase and get the property practitioner to explain any confusing conditions/terms to you so that you’re clear about what they mean.

Keeping a check on your emotions during this part of the process is critical though, and don’t get caught up in the dream if it looks like it’s going to be an unaffordable one. 

Step 5: Apply for a Home Loan, Get the Rate You Deserve

Once a seller has accepted and signed your offer to purchase, you have a few days to wrap up the finance for your new home. This is the part most people stress about, but if you’ve followed the process described here, it won’t be an arduous one. Over 90% of GetGo Home Loans’ clients who are pre-approved get a bond, and our team of Home Loans Specialists will assist you with your application for finance to as many banks as possible. Using a bond originator not only speeds up and simplifies the process for you, but it gives you negotiating power with all the banks to guarantee you the best rate.