Property: Bright Future Ahead for the Township

A BRIGHT FUTURE AHEAD FOR THE TOWNSHIP PROPERTY MARKET PROPERTY

Kasi property is booming, and the time to buy is now

Everyone dreams of buying a reasonably priced home in a good, safe area but there are not many affordable properties available in major urban areas. The property market has indeed reached a point of saturation in metropolitan areas, forcing developers and property companies to look elsewhere for opportunities but, while the township property market has long been misunderstood by many in the property industry, the value and potential within this previously ignored market segment has finally been uncovered and is growing rapidly.

Township property prices are rising much faster than the rest of South Africa’s residential market, according to the First National Bank (FNB) house price index. Townships now boast significant developments and the building of malls and shopping centres also boosts the market. Houses that were previously worth R300 000 have grown in value to reach R500 000, because they are located next to a mall. Infrastructure is improving at a rapid pace and the new developments cater for different income groups. Integrated townships are proving a win-win for both buyers and developers as the demand for residential, commercial and retail elements complement and feed off each other.

As a first-time buyer chasing after price and value, the Kasi is the place to buy at an affordable price, and you get the added benefit of being part of a vibrant community. Township developments offer the latest amenities at a relatively low price and township developers are attracting buyers with concepts such as Tuscan roofs and big stands for future extension if needed.

Why buy in the township?

• Buyers get properties at affordable prices • The availability of essential infrastructure • The availability of lifestyle amenities • Residential and commercial properties create demand for each other • Better opportunity for rise in value than in metropolitan areas

Are you ready to buy? Follow these steps to get the ball rolling

Do your homework and decide if this is the right time to enter into the property market. Prepare yourself by doing a credit check and applying for a prequalified home loan. From here, you will know what your monthly instalments will be and you can plan your monthly budget according to these numbers.

Save for a home deposit

Your first step before entering into the property market should be saving towards a deposit. Buying your first home requires planning and saving. A deposit is very important as it gives potential home buyers the boost they need when applying for a home loan.

If you have a deposit to put down, the banks will take this into account and your affordability score will rise. In addition, your monthly home loan repayments will be lowered and depending on the relevant bank’s criteria, you could be able to apply for a higher bond if you wish. Saving towards a deposit is a simple concept, although it can seem difficult depending on your financial situation. Being able to put down a deposit will result in lower instalments and less interest over the loan period, making paying off your loan more manageable.

Check your credit profile

Knowing your credit status and working towards a good credit status is important. It can improve your chances of being approved for a home loan rather than being sent away from the bank without a home loan being granted. An important step towards home ownership is having a good credit record. A good credit profile is when your credit history has been maintained in good standing for a certain length of time by adhering to monthly payments on time. If you don’t already have a credit history, then it is advisable to open an account or apply for a credit card. By using the credit available and paying it back diligently, you can start building a reputable credit score.

What home can you afford?

Working out how much you can afford when buying a property is simple. Use a bond affordability calculator to understand what you can afford when buying a home. An affordability calculator works out the home loan amount you can apply for. Your salary after tax, total monthly expenses, interest rate and loan term (years over which you will pay off your bond) are used to estimate the total loan amount you can afford with the monthly repayment amount.

Using the affordability calculator

As a general rule, you should look at spending no more than a third of your monthly income (after tax and deductions) towards your monthly bond repayments. Make use of a bond affordability calculator to understand what you can afford when buying a property.

Using the bond calculator

A bond calculator is used to calculate the monthly home loan instalments and the interest added over the loan period. This will determine your affordability level by calculating your income against main bond variables and other monthly expenses.

Visit www.sahomeloans.co.za for quick and easy to use bond and affordability calculators.

Apply for a pre-qualified home loan

Being pre-qualified for a home loan is a vital step, as it will confirm the bond amount for which you will be able to qualify. Keep in mind that this amount is not a guarantee from the bank, but rather a guideline to be used when searching for your first home.

There are two ways in which to apply for a pre-qualified home loan. You can go to the banks directly, or use a mortgage originator. A mortgage originator will help you apply for a bond at multiple lenders, giving you the freedom to compare quotes, whereas your private bank will evaluate your existing relationship with them to determine your loan rate. Once your application has been approved, the bank will issue you with a quote, stating information pertaining to the pre-qualified loan. Cited on your prequalification will be the bond amount, the interest rate and the instalment amount. It is important to note that the final bond approval is subject to various factors such as the bank’s property valuation and a signed offer to purchase.

Do you qualify for the Finance Linked Individual Subsidy Programme (FLISP)?

The Finance Linked Individual Subsidy Programme (FLISP) is an instrument that assists qualifying households by providing a once-off down payment to those households who have secured mortgage finance to acquire a residential property for the first time.

HOW FLISP WORKS

FLISP was developed to enable first-time home ownership to households in the “affordable or gap” market; that is, people earning between R3 501 and R15 000 per month. Individuals in these salary bands generally find it hard to qualify for housing finance and their income is regarded as low for mortgage finance, but too high to qualify for the government “freehouse” subsidy scheme. Depending on the applicant’s gross monthly income, their once-off FLISP subsidy qualifying amount may vary between R10 000 and R87 000, as defined in the FLISP Subsidy Quantum. Any residential property acquired with a FLISP subsidy may not exceed the R300 000 price margin.