Buying a home involves a few steps including finding out about subsidies and applying for a home loan. This is how it works.
How much does it cost to buy a home?
You need to pay the following:
? Purchase price. You can fund this using a home loan
? Transfer fees. This is the cost of transferring the home into your name
? Transfer duties. A tax paid to government on properties priced over R1 millionTransfer fees and transfer duties are not always covered by a home loan so it is a good idea to save some money for these so you can pay for them in cash.
Extra costs may also be incurred such as:
? Moving costs
? Maintenance – you may need to paint, install security gates etc.
1.How much can you afford to spend on your home?
Take your income and deduct your expenses including monthly savings. The balance is how much you have to spend on a monthly home loan repayment, but it is wise to not allocate all of it to a home loan in case interest rates go up, you incur other monthly expenses etc. You will also need some extra funds each month for costs such as additional electricity and garden maintenance.
2.Find out if you qualify for financial assistance
Some institutions such as the National Housing Finance Corporation offer households earning less than R22 000 a month a subsidy to make home loans more affordable. You can visit the Department of Human Settlements to find out what is available for home buyers. Your employer may also offer financial assistance.
3.Apply for a home loan
Check with the bank to find out if you qualify for a home loan. The bank will review your income and expenses to determine how much they will lend you, based on what you can afford to repay.
When you apply you’ll need:
? ID
? Proof of income such as salary slips
? List of monthly expenses
How do home loans work?
A bank lends you the money to pay for your home and you pay it back monthly, with interest, over a number of years.
? Deposit: Some banks don’t require a deposit, but having a deposit can reduce your monthly instalments and the total amount you pay over the term of the loan
? Term: Home loans usually run over 20, in some cases 30 years
? Interest rate: You can negotiate this with your bank, and they may give you a good interest rate if you have a good credit record
4. Start looking at properties in your price range
Add your home loan to any financial assistance you qualify for and you’ll see how much you can afford to spend on a new home. Now you can start looking at properties in your price range.
