6 points to consider when buying a home

Jun 14, 2016 by Brendan Jack

There’s never really a ‘best time’ to buy a home, as property will ultimately continue to grow in price. 2008-2009 was said to be a premium bubble period for SA property prices. But short of creating a time machine, now is the time to secure your patch of land and customise it to your specifications.

Before you start a new chapter, there are a few questions you need to ask.

Affordability

The first and obvious question is: can you afford to buy?

Not just initially, but what are the overall costs going to look like in a year from now? How about five years from now?

Don’t overcommit if your funds are stretched.

Time to reflect

If going 'all in' on new property is a financial gamble, rather wait a while longer until you’re more secure. Perhaps there’s a new job on the horizon, or put savings away to help with a bulk deposit later down the line.

Remember that some home loan products allow you to qualify for larger home loans without paying a deposit.

Beyond the bond, you’ve got transfer and registration of bond fees, rates, levies and insurance.

To save on interest, can you afford bigger instalments to pay off the loan faster?

Also consider unexpected costs on miscellaneous issues like a faulty geyser or a tree that’s fallen through a wall.

Speaking of which …

What is the condition of the property? Proper plumbing installed? Are you going to need to replace window frames? Any other further costs on the way?

A bank may suggest that you need to be more secure before securing your home. Everyone should have their own patch of land, but it has to be right for the buyer and banker.

When in doubt, start small

Nothing wrong with a stepping stone to your dream home (good things come to those with patience).

Perhaps you don’t need four bedrooms just in case you suddenly get more guests. What size place suits your needs?

There’s sweat equity required in fixing up a place, versus a fully kitted out place that you can step into and kick off your shoes in front of the fireplace.

Which area?

There’s a lot of fun in deciding where to live, taking into account schools that work for your family. Is a nearby hospital important? You willing to travel more than 30 minutes for a world class coffee shop?

But most important, what’s the future of the area? Many affordable places may still be up and coming areas, and possibly a bit rough around the edges. Consider discussing this with someone who lives in the area, or a long-time store owner. Throw the question out on social media, or call a local estate agent. Remember, getting an opinion costs less than a bond. Don’t be shy to ask questions.

Consider online requirements. Moving out of town may be more peaceful, but are you going to be able to get Internet speeds required for sending big work files. If TV options are important to you and your family, have a think about the bandwidth required for offerings such as Showmax and Netflix.

Final checks

Before applying for a bond, settle old debts that could effect your credit rating health.

When house hunting, take photos. Don’t try to remember each place from memory. Write down pros and cons. Put a business pitch together to see which house ‘wins the deal’. Shortlist and revisit the best option. This time, take someone who knows property, or a trustworthy person who understands what a quality build looks like. Perhaps go for a lower price if you spot any defects that need seeing to.

Get any discussions with the seller in writing. “Remember you said that the patio furniture was part of the deal? We were standing in the driveway.” Verbal agreements don't cut it.

Summing Up

Be realistic about what you can afford. Property should offer security and serenity, not be a millstone around your neck.

Moving house is up there with stressful activities, but enjoy the process and see it as an adventure versus a minefield.

Unless you’re flipping the property for short term profit, forget about how the market is doing… rather enjoy the new space until you look to sell or rent in the future.

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