For first-time buyers taking their initial steps towards purchasing a property, there are a few essential aspects that should be considered beforehand such as whether the buyer is ready for the investment and well researched on all the types of options available to them, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
He says that the reason for this is that home ownership is a major commitment that should not be entered into lightly.
"Purchasing a property won’t just affect the buyer’s financial well-being now, but possibly in the future as well. First-time buyers should make the most informed decision possible by obtaining all the necessary information they can. Making a rash, incorrect decision without considering all the consequences will only result in the buyer paying heavily in the future," advises Goslett.
"Due to the long-term nature of property investments buyers will need to evaluate the decision in terms of their life plans, which include their financial situation both currently and in the years to come. It is important that buyers ask the questions: When, where, why and how to invest in your first property."
Goslett offers first-time buyers a guideline to finding the answer:
Goslett says that this all depends on the individual buyer and their financial situation.
The market conditions are currently ideal for buyers wanting to invest, however affordability still remains the crux of the matter.
"There is no doubt that the current market favours buyers and there is no better time to invest than in an emerging market, however many buyers still have high debt-to-income ratios and don’t have the required deposits. As soon as a buyer can show affordability and have the necessary lump amount saved up for a deposit and other costs; they should take advantage of the low interest rates and good prices that the market currently offers," he says.
He adds that buyers should consider whether they can afford and sustain the necessary financial obligation before making the commitment. To precisely assess this, a buyer can use the resources available to them such as financial advisers, banks and bond origination companies. This will give the buyer estimated repayment figures based on bond requirements.
As a general rule, monthly bond repayments cannot be more than 30 percent of total expenses and the majority of first-time buyers will be required to provide a deposit of between 10 percent and 30 percent of the purchase price of their home before being granted finance.
Reducing debt levels will increase the chance of approval.
Goslett says that it is not just the bond repayments that should be taken into consideration as there are other costs involved in a property transaction. These costs can add up to a relatively large amount and it is essential to include these when assessing affordability.
Article continues on pages two, three, four and five: the "where", "why" and "how" of buying your first property as well as advice on bargain hunting...