Make 2021 the year you become a homeowner. Here are some things you need to consider that will help you buy your first home comfortably and happily.
Save for the biggest deposit possible
Buying your first home is a significant financial decision. Before you commit to 20 to 30 years of instalments, take an honest look at your current finances, including any short-term debt you could reduce and any savings you have. Most home loan agreements will require a deposit of at least 10% of the purchase price, however the bigger your deposit, the more you save on interest in the long run.
Berry Everitt, CEO of the Chas Everitt International property group, advises younger buyers: "When buying a home, sooner, is always better than later, because whatever the interest rate is, the steady rising of home prices will always mean that you need a bigger home loan this year than you would have needed last year, to buy the same property, and a higher salary to qualify for that loan."
Reduce short-term debt & pay more than the minimum amount
Banks look at your debt-to-income ratio to see if you will have enough each month to handle a home loan payment in addition to your monthly debt payments. If you work on reducing your short-term debt, you will also be able to pay more than the minimum amount on your bond repayments. Berry Everitt, CEO of the Chas Everitt International property group says, "If you have a bond of R1m at an interest rate of 7%, for example, and pay in an extra R1000 a month, you will reduce the bond repayment term by more than four years and save some R208 000 worth of interest."
If you are renting this is a good time to buy
Berry Everitt, CEO of the Chas Everitt International property group states: "Every one of the first-time homebuyers that we had in 2020 (around 64% of our buyers last year) were all people who were previously renting properties. They found this to be a great opportunity to buy, and we saw the age of first-time homebuyers being older compared to a decade before. The lower interest rates, the lowest in 50 years, are creating a market for first-time buyers.
Plan for a home office
The way we are working has been reinvented, as is clear from a CNN Business article's recent headline "The office, as you know it, is dead." According to the article the pandemic proved that employees don’t need to work in office cubicles to be successful. This has become a very important factor for many more prospective home buyers. An article in Businesstech suggests that South African businesses predict that in three years’ time a third of their staff (33%) will still be working from home. If you are working from home more than at the office, then plan around having a quiet space to work, when looking at buying a home in 2021.
Consider a country property
Semigration is the new buzz word when moving to another location within your home country. The country towns Napier and Bredasdorp, along with coastal areas Arniston, Struisbaai, Agulhas and Suiderstrand offer buyers the opportunity to live a mere 2 hours away from the city, working from home and still being close enough to go to the office if needed. Berry Everitt, CEO of the Chas Everitt International property group said, "We are thus not surprised that more employees, as well as executives, are now seriously exploring the idea of moving away from a big metro to a smaller town or an estate in a more rural area. This pandemic has been a wakeup call for many people and families who are now seriously reassessing their priorities, and seeking ways to make permanent changes to achieve a lifestyle that is less rushed and stressed, and we see this reflected in a significant increase in enquiries for country homes.
Get the help of a property professional
We suggest that you find a Property Professional to guide you through the home buying process. As Property Professionals we can make this process easier because we will work for you and provide the exact information that you need.