Many of us dream about owning our own home, but it takes much more than wishful thinking and a savings plan. Acquiring your first property requires a plan and a strong dose of determination.
Steven Barker, Head of Home Loans at Standard Bank, says there are many steps in this process, but if you follow a disciplined approach, you will own your house in no time.
Before you start saving, Barker says you need to give yourself a personal credit check.
If you have lots of outstanding debt, not only will it be harder to save, but it may impact the amount of money for which you qualify when applying for a home loan – numerous small accounts can add up to as much as R2 000 per month, so start your plan of attack by eliminating as many of those bills as possible.
“While getting rid of small debts will help you qualify for a loan, it is equally important to work out what you can realistically afford to pay on a bond,” says Barker.
“Don’t only look at the bond repayment – factors such as rates, maintenance and insurance must be added into the equation.”
He says another important aspect to understand relates to planning for future financial commitments.
“Make sure your personal cash flow can cope with increased payments if interest rates should rise. By preparing a personal budget which allows for costs to increase, you will be ensuring that you avoid finding yourself in financial difficulties at a later date.”
Apart from a personal credit check, Barker says it is important to check your credit history as this plays a major role in ascertaining if one qualifies for a home loan.
It benefits to make certain that any accounts you may have is correctly serviced and outstanding debts are settled. Having a bad credit history or a poor track record can hamper your chances of a bond approval.
“It is also a good idea to get a pre-approved loan before you start house hunting. This will help you to resist the urge to look for homes that are out of your affordability,” says Barker.
He says it is also vital to stick to your price range – if you borrow in order to buy a more expensive house, you leave no margin for error if interest rates go up, or if you experience a financial emergency.
“Buying a property is a huge financial commitment, but it has equal rewards. Your bank can give you valuable advice during the process, so don’t hold back on your questions,” says Barker.