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Things to consider if this is your first home
You no longer want to rent and have started thinking about owning your first home. Before you rush in, consider these things:
How long do you plan to live in it?
If you buy a home and get a work transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home might not have appreciated enough to cover your initial costs to buy the home and what it would cost you to sell your home.
The time that it takes to cover those costs depends on various economic factors. You should plan to stay in your home at least 3-4 years to cover buying and selling costs.
Will this home suit your needs well into the future?
What do you need in a home to make it work for your lifestyle right now? Five years from now? Depending on how long you plan to live in your home, you'll need to be sure that it suits your present needs. For example, a two-bedroom home might be perfect for a young couple with no children. But if they were to start a family, the space could very soon become inadequate. In this case, it would be a good idea to consider a home with room to grow. Could alterations be done to create extra bedrooms? Could an attic be used as a main bedroom?
Having an idea of what your life plan is and what your real needs are, will help you to find a home that works for you well into the future.
How does your financial situation and your credit situation look?
And what can you really, honestly, afford?
Is now the right time to be buying? Is your financial picture looking healthy? How does your credit situation look? While it's usually possible to find a bank who will grant you a bond, solid lenders are more sceptical if your credit history is off-kilter. Generally, only a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. One school of thought says you should avoid borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should push to buy as much of a home as you can possibly manage, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you in a position where you expect to increase your income soon? Would you rather be conservative and fairly certain that you can make your bond payment without being stretched financially? Be sure that whatever you do, it's within your comfort zone. To determine how much home you can afford, use our affordability calculator. Then call one of our experienced home finance experts at ooba on 0860 00 66 22. Or complete our 30 second application and we'll contact you to discuss the options.
Where will the money for the deposit and bond and transfer costs come from ?
Usually, home buyers need money for a deposit and bond and transfer costs. However, with today's broad range of home loan options, having a lot of money saved for a deposit is not always necessary - if you can prove that you are a good financial risk to a lender. If your credit isn't perfect but you have managed to save 10-20% for a deposit, you will still appear to be a very good financial risk to a lender.
The ongoing costs of home ownership
Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a flat or a townhouse or live in a security estate, for instance, you might have to pay a monthly homeowner's levy.