Buying your first home? Common mistakes and how to avoid them

Article summary

• Know what you can afford by getting pre-approved.
• Scan the Offer to Purchase carefully to understand your responsibilities and those of the seller.
• Research the neighbourhood by interviewing residents before committing to buying the property.

Taking your first step onto the property ladder is exciting, but don’t rush in without doing your research. We provide some examples of mistakes inexperienced buyers might make, so you can make informed decisions.

First time homebuying mistakes

We advise hiring an estate agent to guide you through the property-buying process. They can provide invaluable advice on the movements of the market.

But we can provide some valuable tips upfront.

Not knowing what you can afford

We advise getting pre-approved. The pre-approval process will provide you with a solid estimation of what you can afford.

This way, you’ll be able to enter the market with confidence that you’ll be able to afford a property within the specified price range. 

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.

Not researching the neighbourhood

What if you end up in a neighbourhood that is too noisy, or too unsafe? What if the neighbourhood doesn’t have easy access to facilities such as hospitals or schools?

You should ask people in the neighbourhood about such issues before committing to the purchase.

Not scrutinising the Offer to Purchase

The Offer to Purchase is a document signed by the seller and buyer that dictates the responsibilities of each party.

If you don’t pay careful attention to the Offer to Purchase, you may end up with responsibilities you can’t or don’t want to fulfil. You may also unintentionally allow the seller to shirk certain responsibilities.

You need to know what sort of clauses the Offer to Purchase might include, such as 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.

Not arranging a home inspection

A home inspection is vital as it will reveal defects that the home seller is responsible for fixing.

The requirement for a home inspection should be included in the Offer to Purchase.

You need to know the difference between patent defects and latent defects. Patent defects are obvious even without a home inspection. Latent defects may only be revealed by a home inspection.

Latent defects can be tricky, as some may not be revealed by the inspection and only become evident later. The buyer can only hold the seller responsible if they can prove the seller hid the defect, and only within three years of discovering the defect.

However, conducting a home inspection will at least give you the best chance of avoiding long-term issues.

Not factoring in additional costs

There are costs over and above the home loan and interest repayments.

These include:

• Transfer costs.
• Transfer duty.
• Bond registration.

Transfer costs refer to the cost of transferring the property to your name. The transfer attorney (also known as a conveyancing attorney) is hired by the seller but paid by the buyer.

Transfer duty is a tax on the transfer process paid to SARS. Properties worth less than R1 100 000 are exempt from transfer duty.

Bond registration is the cost of registering the bond in your name. This is conducted by a bond registration attorney hired by the bank.

You can use our Transfer Cost Calculator to determine what you will likely pay for transfer and bond registration, based on the value of the property.

Other hidden costs you should take into account include:

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

Not shopping around for home loan deals

If you only apply to one bank, such as your private bank, you won’t have the opportunity to shop around the various banks to see which ones offer the best deals.

ooba Home Loans can help in this regard by submitting your application to multiple banks. We present you with the deals they offer, including repayments and interest rates, and allow you to compare deals so you can choose the one best suited to your situation.

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

Before buying, find out what you can afford

As we mentioned above, it helps to know what you can afford before commencing the house hunt in the first place.

The pre-approval process assesses your financial situation, including your credit record (the most important factor banks take into account) and provides a solid estimation of what you can afford.

It helps to know your credit record as you can estimate your chances of home loan approval. A credit record of 610+ is the minimum required to have a chance of home loan approval. 

Knowing your credit record beforehand will let you know if you should improve your credit record before applying, such as by paying off debts.

So get pre-approved by contacting ooba Home Loans or using our Bond Indicator.