EVERYTHING A FIRST-TIME BUYER SHOULD KNOW (Part 3)
Category Advice
Navigating the legal process of buying a property involves specific steps, similar to any legal transaction. The convenience of the modern era allows much of this process to be conducted online. For instance, ooba, the bond originators, provide a user-friendly website equipped with calculators and tools.
These resources offer straightforward, step-by-step instructions, making it easy to understand and utilize them. Should you have any questions, your property practitioner and dedicated ooba consultant are readily available to provide assistance.
FINANCING YOUR FIRST HOME
Few of us can afford to buy a property without some kind of financial assistance. That help comes from a number of banks which have Home Loan or Bond products.
If you're able, it's wise to save up for a deposit (such as 10 percent of the purchase price). It not only reduces your monthly repayment instalments on your loan, but right at the start when you're applying for a home loan, it shows the bank and the seller (once you find a property you want to buy) that you're a responsible, serious buyer.
But it is possible to buy without a deposit. Your circumstances will dictate that. ooba can assist you in applying for a zero-deposit bond.
APPLYING FOR A HOME LOAN
Today, it's very straightforward. When you apply through a bond originator, it's even simpler, with no costs for applying. This is how it works - ooba represents a range of banks, so you only fill in one application form. They apply to the banks on your behalf, and when they've secured a loan, they negotiate the most favourable package for you - you may even get a lower interest rate, which means a lower monthly amount when repaying your home loan.
ooba provides you with multiple quotes, so you can compare them.
DO I QUALIFY FOR A GOVERNMENT HOUSING SUBSIDY?
It's known as First Home Finance (formerly FLISP), and it's made homeownership a reality for first-time home buyers with low incomes. If your income ranges between R3 501 to R22 000 per month, you are likely to qualify provided you meet these other criteria:
- You must be a South African citizen with permanent residency in South Africa.
- You must not have received a government housing subsidy before.
- You must be married or cohabiting OR single with financial dependents.
- You must be over 18 years old.
- You must not have owned a fixed residential property before.
If you apply with ooba Home Loans, they'll determine if you meet the criteria and, if you do, they'll submit your application and monitor its status.
HOW DO I KNOW WHAT I CAN AFFORD?
That's what why these online tools are so handy. Once you've filled in the application form - you'll be walked through the requirements such as your salary and other documentation - the tool will tell you what loan you're eligible for. Of course, it isn't a guaranteed loan, but it gives you a good indication of what you can afford.
Pre-approval is first prize, and increasingly, it's essential. What's that? It's when the bank gives you an indication of what you should qualify for when you apply for a home loan - you can also take it one step further and get a written document stating you are preapproved for a home loan of X amount.
The advantages of this are enormous - you will start your search for a property being able to prove you are a serious buyer, and that you can afford the property you're looking at. That makes the property practitioner's role easier when she's negotiating with homeowners/sellers, and it puts sellers at ease knowing you can afford their home.
By using a bond originator like ooba you are more likely to get your home loan approved than by just applying to your bank.
I OWN MY OWN BUSINESS
This is always a more complex application because you essentially don't have a salary slip. You will be required to provide more documentation to support your application - this doesn't mean you won't get a bond. It just requires more input on your behalf.
FICA
You will have heard of FICA. It's a legal requirement when you're applying for many things like a cell phone. You need to be 'FICA-ED' to purchase a property.
FICA is an abbreviation for the Financial Intelligence Centre Act 38 of 2001 (as amended). This Act was brought in in order to fight financial crime, such as money laundering, fraud, tax evasion, terrorist financing activities and identity theft. There's a range of different documents which will assist you in the process, from a letter from a local councilor or chief, a retail statement from a clothing store, or your cellphone account. Your property practitioner will be able to guide you with this.
THE APPLICATION PROCESS
To get started, head to ooba.co.za OR visit your nearest Wakefields Real Estate branch and ask a property practitioner to assist you. It'll be a good opportunity to chat to a professional, who'll be able to advise you once you're ready to buy.
Next month:
PART 4 - THE TRANSFER PROCESS, from signing the deal to key-hand over as well as understanding your responsibilities as the buyer.
Author: Haydn Wakefield
