Buying a House in South Africa – The 6-Step Guide to Homeownership

Article summary:

• Get pre-approved to find out what you can afford.
• Apply for a home loan with ooba Home Loans to ensure you get the best deal on your bond.
• Additional costs of purchasing a home include transfer costs, bond registration costs, and moving costs.

Buying a house is an exciting prospect, but some are intimidated by the process. We provide a step-by-step guide to make things simple and show there’s no reason to delay.

1. Get pre-approved

Pre-approval will provide you with a solid estimate of what you can afford, so you can house-hunt within your price range, secure in the knowledge that you’ll be able to obtain a home loan for a house within that range.

Pre-approval will also provide you with your credit record; the most important factor banks take into account when assessing your home loan application. So you’ll know whether you should spend time investing in your credit record before applying.

You can get pre-approved by contacting an expert at ooba Home Loans or by using our free, online pre-approval tool, the Bond Indicator.

2. Find an ideal home

As mentioned, pre-approval will help in this process by providing you with an estimate of what you can afford.

Hiring an estate agent will also be a big help, as they can help you find a home that fits your requirements, and advise you on affordability and the movements of the market, such as interest rates.

Once you’ve found an ideal home, be sure to do some research before committing. For example, you could investigate the neighbourhood to ensure there are no nasty surprises, such as loud traffic.

3. Make an Offer to Purchase

The Offer to Purchase is a document that dictates the obligations of the buyer and seller. These obligations must be fulfilled for the transaction to go ahead. The document needs to be signed by both parties.

As a buyer, you should scan through the document carefully to ensure you don’t get caught out by clauses you can’t fulfil. You’ll also want to include obligations for the seller, such as performing a home inspection.

Be aware of the 72-hour clause

This clause allows the seller to continue marketing the property. If they receive a better offer, they have to give you 72 hours’ notice before they can accept it. If you fulfil your obligations within those 72 hours, the seller can’t accept the other offer.

Most sellers will refuse to remove this clause.

4. Apply for a home loan

Once the Offer to Purchase is signed, you embark on the most critical step; securing a home loan so you can fund the home purchase.

Your home loan includes monthly repayments and interest; the latter of which can fluctuate with the movements of the market.

We provide a number of calculators that can assist in this process.

Our Bond Affordability Calculator will estimate the bond you can qualify for and the consequent monthly repayments.

The Bond Repayment Calculator determines what you will pay monthly into the bond.

The documents you need

You will need the following documents when applying for a home loan:

• A completed and signed application form.
• A copy of your ID document.
• Proof of residence.
• A copy of the offer to purchase containing both the seller and purchaser’s details (not necessary for pre-approval).
• Proof of income. You will need to provide a salary slip (not older than two months), or a letter from your employer with a breakdown of your salary and deductions. If you are self-employed then you will need a letter from an accounting officer confirming your income, or a statement of your assets and liabilities.
• Six months’ worth of bank statements.
• A copy of the marriage certificate (if married).

The deposit

Most home loans will require a deposit, usually 10% of the purchase price.

The higher your deposit, the better your chances of securing the home loan and the lower your interest rates and repayments.

The deposit poses a barrier to many first-time buyers, which is why many banks provide the option of a 100% home loan, which removes the need for a deposit.

Get the best deal on your home loan

When applying for a home loan; your best bet is to apply with the assistance of a home loan comparison service such as ooba Home Loans.

We submit your application to multiple banks, allowing you to compare the deals they offer and choose the one that best suits your situation.

This gives you the best chance of securing a home loan with low interest rates.

So apply with ooba Home Loans to get the best deal on your home loan.

5. Transfer and bond registration costs

Transfer of property and bond registration take place after the home loan is approved. Many homebuyers are caught off guard by these additional costs.

• Transfer of property refers to the transfer of the seller’s bond to you. The seller hires the conveyancing attorney to perform this, but the buyer pays the fee.
• Transfer duty is a tax paid to SARS on the transfer of property. Properties worth less than R1 100 000 are exempt from this tax.
• Bond registration is when the bond is registered in the buyer’s name. The bank hires the bond attorney, but the buyer must pay the fees.

The transferring attorney lodges all the required documents, together with the new bond and the old bond cancellation, with the Deeds Office.

It takes 8 to 10 working days for these to be examined and, provided there are no changes, the transaction is registered.

The Deeds Office holds on the Title Deed until the buyer has paid off the bond. Homeowners can access the Title Deed on request.

Use our Transfer Cost Calculator to determine what you will pay on the transfer of property, transfer duty, and bond registration.

6. Move into your new home

Once the Title Deed is registered, the buyer will officially be the new owner of the home!

Moving into the new home is one of the additional costs that the homebuyer should have accounted for. The costs can be anywhere between R5 000 and R15 000 in the same city, but most companies offer a discount if you move in the week and in the middle of the month when demand is lower.

Other additional costs homebuyers may not be aware of at first include:

• Repairs and maintenance.
• Utilities.
• Rates and levies.
• Security.
• Home Insurance.

Know what you can afford

As mentioned, pre-approval will provide an estimate of what you can afford so you can house hunt with confidence.

The pre-approval certificate serves as proof to the bank that you can afford the home (provided it’s within the dictated price range), so they’ll be more likely to grant the home loan.

So get pre-approved with ooba Home Loans to find out what you can afford and improve your chances of bond approval.