Buying your first home is an exciting milestone – a new chapter full of possibility and pride. At Homes for All, we know it can also feel overwhelming, especially for first-time buyers navigating the many steps and costs involved.
That’s why we’ve put together this straightforward, easy-to-follow guide to help you take confident strides towards owning your brand-new home. Here are the five easy steps to buying your first home in South Africa, designed to make the process as smooth and enjoyable as possible.
Step 1: Understand Your Finances, Set a Realistic Budget and Get Pre-Approved
Before you fall in love with a property, it’s essential to take stock of your financial health. Buying a home is a big commitment and being clear on what you can afford will save you stress later on.
Start by assessing your income, expenses and savings. Most banks are happy to lend you the full purchase amount but it is a good rule of thumb to aim to have savings for a deposit of at least 10% to 20% of your target property price. This often ensures you get a lower interest rate on your loan which means lower monthly repayments. Don’t forget to factor in additional costs such as transfer fees, bond registration, attorney fees, and moving expenses. These can add up to around 7% to 10% of the purchase price. When buying a previously owned home, these costs are often separate from the house price and need to be accounted for. However, when you buy off-plan, these additional costs are typically not applicable when buying from developers. By setting a realistic budget early, you’ll focus your search and have a better guarantee of success. There are handy online calculators to help you estimate how much bond you can afford based on your income and expenses.
Check your credit score. Your credit score plays a key role in loan approval, so check it and work on improving it, if necessary.
Getting pre-approved for a home loan is your next critical step. Pre-approval gives you a clear idea of how much a bank is willing to lend you based on your financial profile and it can give you a significant advantage in a competitive market. It also makes it easier to understand what price range you should be considering. Whether you’re looking to buy a home off-plan or an existing property, knowing your budget gives you more power when negotiating.
To get pre-approval, the banks will require proof of income, bank statements and a valid ID from you. Most banks will also want to review your credit report to determine your eligibility.
Step 2: Decide What You Want in a Home and Location
The next step is to decide on the type of home and location that fits your needs. Whether you’re looking for a newly built home off-plan or a ready-to-move-in property, think about your long-term needs.
Ask yourself:
- Are you comfortable buying an older property that may need repairs and maintenance or do you prefer a move-in-ready modern home?
- Do you plan to have children in the future; and if so, does the property offer enough space for a growing family?
- How many bedrooms or bathrooms do you need?
- Are you interested in an apartment, townhouse or a house?
- What’s your ideal location? Is proximity to work, schools, parks or public transport important?
- How much time and money are you willing to spend on repairs and maintenance with a previously owned home?
- Are you flexible enough to wait for a new development or do you need something ready for immediate occupation?
- Do you want the opportunity to inspect a previously owned home before buying or would you prefer the warranties or guarantees associated with new builds?
Off-plan homes often offer the benefit of customisation and modern features in new developments, while purchasing a resale property means immediate availability but may require some renovations. The location is just as important as the property type – make sure you research areas that suit your lifestyle.
Step 3: View the Property and Review the Offer to Purchase
Once you’ve identified a home you’re interested in and that is within your budget, it’s time to view it in person. If you’re buying off-plan, you may only be able to visit a showhouse or view models of the development, but it’s still an opportunity to get a feel for the property’s style and finishes.
When you find the right home, you’ll need to complete an Offer To Purchase (OTP). The OTP is a legally binding agreement between you and the seller (or developer) that outlines the terms of the sale, including the purchase price and payment schedule.
It’s crucial to ensure that you read through and understand the terms of the OTP before signing. If you have any queries or concerns, seek clarify from your agent or the conveyancer.
Step 4: Finalise Your Home Loan and Prepare for Transfer
After your OTP is signed, it’s time to finalise your home loan application and prepare for the transfer process.
Along with your bond application, you’ll need to pay for costs like bond registration fees, but when buying from a developer, transfer fees and transfer duty typically do not apply. These additional costs, which can be significant when buying a previously owned home, are often factored into the property price when purchasing a new, off-plan property.
Once the legal transfer process is complete, your new home or property will be officially registered in your name.
Step 5: Take Possession and Start Your New Chapter
When all the paperwork is done and your bond has been finalised, it’s time to take possession of your new home.
With a previously owned home, it’s also crucial to be aware of latent defects, which are issues that may not be immediately visible to the average person, such as damage to plumbing, rising damp or structural weaknesses. In South Africa, the “voetstoots” clause in the deed of sale means that once the property is sold,the property is sold as is and the seller is not liable for any defects that weren’t noticed unless they were deliberately hidden. For this reason, it’s essential to ensure that you are aware of any potential issues before proceeding with the purchase.
It is recommended to hire a specialist to conduct a thorough inspection of a previously owned property, especially for structural defects. A professional home inspection can uncover hidden problems that may not be visible during a casual viewing, ensuring you aren’t caught off guard after moving in.
If buying an off-plan property, the developer will hand over the keys once the construction is completed and all requirements have been met. It’s a good idea to do a final walk-through of the property to ensure everything is in order and meets your expectations. It’s crucial to inspect the property thoroughly to ensure the finished product matches the initial plans and specifications.
A newly built home typically comes with various warranties, including a 3-month maintenance defect period, a 1-year warranty on the roof, and a 5-year warranty on the structure. These warranties provide added peace of mind, ensuring that any defects or issues that arise within these periods are addressed by the developer.
Final Tips for First-Time Buyers
- Be patient: Buying a home is a process. Don’t rush the decision – take your time to find the property that’s right for you.
- Do your research: Whether you’re buying off-plan or an existing home, research the developer’s or seller’s reputation and check for any red flags.
- Think long-term: Consider the property’s future resale value, the area’s growth potential and how it will meet your needs in the years to come.
- Stay organised: Keep all your documents in one place and track important dates, such as bond approval deadlines and handover dates.
- Get insurance: Home insurance protects your investment, so make sure you have a policy in place from day one.
Homes For All holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority (PPRA)
