So, you have saved up for a deposit. You have decided what you want in a home, as well as the area you would like to live in. You think you are ready to buy a home.
But not so fast: what about the numbers? Reinier van Loggerenberg, CEO of Craft Homes, says if there is one gap he sees over and over in South Africa’s housing market, it is understanding. “People want to buy.
They are tired of renting. They saved something. “But the moment they start looking, jargon and guesswork creep in: ‘How much can I really afford?’, ‘Why was my pre-approval less than I expected?’, and ‘Does debt review mean I am shut out forever?’ He has this clear, practical guide for first-time buyers and anyone re-entering the market as well.
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Affordability is not just the bond repayment. Lenders assess your total monthly obligation and whether your income can comfortably manage it, Van Loggerenberg says. Start bottom-up, not top-down is Van Loggerenberg’s advice.
Fix your monthly ceiling. Decide on the maximum total housing spend you are comfortable with (bond and rates/levies and insurance and a maintenance buffer). Work backward.
Use a bond calculator to see what loan size matches that monthly ceiling at conservative interest rates. Van Loggerenberg also warns consumers to remember once-off costs. Transfer duty (if applicable), bond registration costs, legal fees, council deposits, moving costs and initial furniture or appliances must all be paid before you can say the house is yours.
“Many buyers budget for the monthly repayments and then get surprised by the once-offs.” He points out that a deposit changes the game. “Even a deposit of 5 – 10% of the purchase price can improve the chance of approval and the interest rate you are offered. A lower rate compounds to big savings over time.
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