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One viewing is not enough
W THE majority of those who bought property last month were first-time buyers. PICTURE: KINDEL MEDIA/PEXELS
MOST FIRST-TIME BUYERS DON’T USE THEIR OWN BANK FOR BONDS FIRST-TIME buyers appear to have paid slightly less for their homes than they would have a year ago, according to statistics from Comcorp Mortgage Software. The data revealed that last month, the average price paid by first-time buyers was R955 135 compared to R963 625 in February last year. The average approved bond last month was just over 92% at R880 949, with the average deposit just under 8% at R74 186. The same period last year saw the average bond amount at R882 156 and a deposit of R81 469.
The data also shows that the average loan to value ratio to firsttime buyers, both last month and last February, was 93%. This ratio is what lenders use to determine how much risk they are taking on with a secured loan. Other Comcorp findings for last month include: • The average age of first-time bond applicants was 36. • Only 25% of approved bonds were taken up with the applicants’ own bank. • First-time buyers accounted for 72.69% of property purchases.
HEN searching for a property, many buyers feel they need to view a home more than once – a practice approved by agents. Karen Turner, property practitioner at Jawitz Properties North Coast, says: “The purchase of a property is the single largest investment you’ll probably ever make, so you should be able to view as many times as you wish and for as long as you wish. “The first viewing is usually on a broader basis, taking into account location, layout and getting a feel for the property. “Subsequent viewings may be with an objective relative or friend, narrowing it down and obtaining more information, and looking at how furniture might fit and what minor alterations may be required.” It is important to see each property on your list a few times, agrees property practitioner Cacisa Mgudlwa, who is also a town planner. Something might spring out at you on a second viewing, which you had not noticed before – and this might be the deciding factor. “Try to visit at different times of the day, so you see the home in a different light each time. Additionally, do a drive-by in the morning or evening during rush hour to see if there is traffic build-up. “Check the neighbourhood lifestyle, whether it is family-friendly or not. Before you make the decision to buy the house, check the demographics of the area, if possible, and meet some of the neighbours to find out more about the lifestyles of people in the area.” Second and third visits are essential, says Matseleng Mogodi, founder and principal of Snooks Estates. Even if this represents extra work for the agent, she believes it can
YOU SHOULD always try visit your favoured properties more than once before deciding which to buy. PICTURE: ALENA DARMEL/PEXELS be done. There also need to be valid reasons for multiple visits. “One visit is definitely not advisable, especially when you didn’t spend enough time checking out the house. It is, however, important to not become a nuisance because sellers still deserve their privacy.” Echoing this, Jeremy Craig, Jawitz Properties Sandton branch manager, says:
“Ask any questions you may not have covered before to confirm what your head and heart are telling you. “Have a good look at the property again to ensure you have not missed anything and that you still feel the same way you did the first time around. Take note of defects – things that you may have to fix – that will guide you in making an offer.”
How bond originators can save home buyers money
The Flisp subsidy assists first-time buyers in the ‘gap’ market to buy their own homes. PICTURE: GABRIELLE HENDERSON/UNSPLASH
LET FLISP HELP YOU BUY YOUR DREAM HOME BOND originators can help get you better interest rates by approaching more than one bank on your behalf. PICTURE: RODNAE PRODUCTIONS/PEXELS
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NTEREST rates might be on the rise but, if you are thinking of buying a home, working with a bond originator, who will negotiate with the banks to secure you a lower interest rate, can significantly reduce the amount you have to pay on your bond each month. “This saving on your interest rate, called a rate concession, will have a noticeable impact on your monthly bond repayments,” says Carl Coetzee, chief executive of BetterBond. Currently, BetterBond’s average interest rate concession, when applying to four banks, is 0.61%, says Coetzee. This means the interest payable on your bond could be 0.61% below what the banks would have offered if you applied to only one bank. “For example, on a R2 million
bond payable over 20 years at prime, an interest rate concession of 0.61% means a monthly saving of almost R740. So, instead of paying R16 112 each month, you would pay R15 374. Over the 20-year loan period, this amounts to a saving of more than R177 000.” Even on a R1m home, the savings with a rate concession secured by your bond originator will be worthwhile. “By paying an interest rate of prime minus 0.61%, the interest rate for your monthly bond repayment will be 6.89%. This means that instead of paying R8 056 each month, you would pay R369 less. Over the typical 20-year loan repayment period, this rate concession will amount to a saving of R88 520 in interest.
THE GOVERNMENT-backed Finance Linked Individual Subsidy Programme (Flisp) helps first-time buyers in the so-called “gap” market to buy their own homes. This market is made up of those who earn too much to qualify for a free government home but too little to buy without some form of financial help. The subsidy is open to those with a combined gross household income of between R3 501 and R22 000 who meet the qualifying criteria, says Meyer de Waal, director of MDW Inc Attorneys, one of the founding members of the Attorney Realtor Hub and Flisp assistance services. The subsidy ranges from R27 960 to R121 626 and is calculated on a sliding scale, according to the buyer’s income. To qualify the buyers must: • Have their home loan approved. • Be South African citizens and over 18. • Be married, co-habiting or single with a dependent.
• Never have benefited from a similar subsidy before, for example an RDP house. How can the subsidy be used? It can be used to pay for a home loan deposit or to decrease the size of a loan. If the subsidy is used as a deposit, a smaller home loan can be applied for. For example, a R50 000 subsidy on a R600 000 home means the home loan amount need only be R550 000. The subsidy can also be used to increase the purchasing power of the buyer. For example a R50 000 Flisp subsidy added to a R600 000 home loan allows the buyer to purchase a home for R650 000. De Waal explains purchasing a home with a Flisp subsidy: Establish if you qualify. • Establish the home loan amount you will qualify for. Without an approved home loan you cannot get access to a Flisp subsidy. • Get your home loan prequalification estimate and add that to your Flisp subsidy amount. This
will be your home buyer power. Do not forget to budget for transfer and bond registration costs. • Start your property search according your budget. When you find a property you can afford, sign an offer to purchase, using your pre-approval certificate and Flisp subsidy as a guide. • Apply for the home loan. • Apply for the Flisp subsidy. As soon as the home loan is approved you can submit your application. You can apply directly to the Department of Human Settlements in the Western Cape and Free State as well as to the National Housing Finance Corporation if you live in Gauteng or KZN. You can apply directly or through accredited service providers. • Submit the offer to purchase to the Flisp office for submission to the banks for final bond approval. • The government will issue a guarantee to the transferring attorneys once the Flisp subsidy is approved or it can be paid directly in the home loan account. He adds: “A home loan Flisp affordability calculator is available at www.flisp.co.za. Buyers should also check their financial health and what bond they qualify for at https://FLISP.mybondfitness.co.za.
