Buying

It’s Back To Basics Time For Homebuyers

The recent interest rate increase, added to the prospect of higher rentals this year, has given many young people who have been sitting on the fence a push to make a decision and buy their own homes now.

They don’t want to risk not being able to qualify for a home loan if interest rates go up any more,” says Richard Gray, CEO of the Harcourts Real Estate group, “and in many areas, rentals have in any case begun to exceed the monthly home loan repayments for equivalent homes.

This has led to a flurry of activity in the past three weeks, with many of our offices in popular metro areas, especially, reporting a spike in first-time purchasing.”

However, he says, such buyers should not now throw caution entirely to the wind. “There are certain home-buying basics that they must keep in mind, including the decision to never, ever overcommit their financial resources.“ All too many first-time buyers, for example, come unstuck on the so-called hidden costs – that is, having calculated that they can (just) afford the deposit for a particular home they like, they fail to allow for the transfer duty, bond registration costs and legal fees they will have to pay, in cash.

Or they may work out that they can reasonably comfortably afford the monthly repayments on a certain size home loan, and forget about also having to pay insurance premiums, rates and taxes, and municipal service charges, as well as the costs of maintaining their property.

Such buyers, says Gray, will obviously have little or no leeway or reserves to meet any increases in home loan repayments when interest rates rise – and experts are predicting that they will go up at least another one percentage point this year –so they are at high risk of losing the home they bought with such excitement and of doing serious damage to their credit record for several years.

All buyers, and especially those new to homeownership, would thus do well to take professional advice on the size of homeloan they can really afford, and thus what price home they should be looking for.”

Secondly, they should consider this: Absa’s latest figures show that existing homes are currently about 37% cheaper, metre for metre, than newly-built ones – a fact that is especially important for buyers with growing families, because it means they can buy almost a third more home for their money, and probably obviate the need for another home purchase for quite some time. And that, in turn, means that they are likely to make a better return on their property when they do eventually decide to sell.”

The third thing for new buyers to remember, Gray says, is the old adage which urges them to rather buy the worst house in a good area than the best house in a bad area.

In other words, buyers should be guided by an experienced estate agent from a reputable agency when choosing to move to a new area – and then go on a hunt for properties which are sound and have development potential, rather than those which have already been fully developed or newly renovated.Apart from the fact that such properties are likely to be cheaper, they also offer the potential for bigger gains on resale.”



 

Tags
Show More

ImmoAfrica.net

South Africa's No.1 FREE-TO-LIST Estate Agent Property Portal. A hub of info covering topics for #homebuyers, #homesellers, #renters and #lifestyle enthusiasts!

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

>
Close