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How to avoid getting priced out of the housing market

Here are some options available to first-time home buyers who are concerned about increasing house prices and competition in the SA property market.

House Prices

Article summary

  • The South African property market is on the rise in the wake of the Covid lockdowns, leading to higher prices.
  • 100% home loans provide an option for first-time home buyers who can’t afford a deposit.
  • Using a home loan comparison service will help secure lower interest rates on your home loan.

Despite negative predictions, South Africa’s property market is rising in the wake of the pandemic and resultant lockdowns.

This is due in large part to the interest rate cuts of 2020, which brought South Africa’s prime interest rate to a record low.

Another factor is the demand for larger housing, as the pandemic has forced people to spend more time at home.

This has led to a rise in house prices. According to businesstech.co.za, prices for freehold homes have risen 6% in the period from January to April 2021, while sectional title home prices have increased by 3%.

If you’re a first-time home buyer, whose resources are already limited to begin with, you’re probably wondering how you’re going to get a foothold in the property market in these conditions.

Well, here are some of the options you have available to you:

1. Get a 100% home loan

For many first-time home buyers, the deposit is the most challenging part of the home-buying process. It’s hard to muster the resources needed for the down payment, which is usually 10% to 20% of the purchase price.

Thankfully, banks are tailoring their packages to the needs of first-time home buyers by offering the option of a 100% home loan, where the entire value of the purchase is funded by the bank, removing the need for a deposit.

Some banks are more likely to grant a 100% home loan than others. Your best bet is to apply to multiple banks, which you can do with the assistance of a home loan comparison service such as ooba Home Loans.

2. Improve your credit record

Your credit record is a three-digit number that the bank uses to gauge your financial history. The higher your credit record, the less of a risk the bank considers you to be.

So a good credit score (600+) will save you money by getting you lower interest rates on your home loan.

The best way to improve your credit record is to manage your debt well, which also puts you in a better position to afford a home loan.

You can use our free, online tool, the Bond Indicator, to find out your credit record. If it turns out to be low, we can help you improve it by advising you on ways to clear your credit record.

3. Use a home loan comparison service

A home loan comparison service will submit your home loan application to multiple banks, and negotiate with the banks on your behalf.

They then come back to you with the home loan packages that the various banks have offered, allowing you to compare deals and choose the one with the lowest interest rates.

Naturally, the opportunity to get the lowest possible interest rate makes a home loan more financially viable. You don’t even have to pay the home loan comparison service for this, as they earn from commissions.

ooba Home Loans is South Africa’s leading home loan comparison service. We can help you secure the best deal on your home loan, and we also provide insurance packages along with it that will save you money in the long-term.

Furthermore, we make the home buying process easier for you with our range of calculators. Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.

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Simply The Best

Ooba home loans services are simply the best. My Consultant Bianca Dancer was so hands on and helpful from the get go. She guided me through the entire process and put me at ease being a first time buyer. I highly recommend their services.

Tia J

Excellent Service

Jay Govender and Maleshini Reddy from OOBA provided outstanding assistance and guidance in securing our home loan. Response times were excellent and they were professional and friendly.

Brice G

Bond Application

Estelle Vorster was really helpful in securing the best deal for my home loan, she not only negotiated a lower interest rate she went as far as securing 50% discount on the transfer costs.

Butana M