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First Time Home Buyers

First Time Buyers

Buying your very first home, be it a small house or a bachelor pad, is one of the most exciting and also scary things you will ever do in your lifetime. You have looked at hundreds of places—in the papers, on the Internet, with Estate Agents—and then, all of the sudden, you know, this is it! This must be yours!

If you want to make that dream a reality the best is to do your financial homework first, before you even look at any property. This will prevent unrealistic expectations and disappointment later. Most banks offer packages for first time home owners as they realize your special needs. * Have a look on the internet at all the banks offerings and draw up a comparison for yourself before you go any further.

*Newsflash! Some banks has withdrawn the first time home buyers product during the past few weeks, or changed the qualifying criteria and the benefits, so check with the bank of your choice if you are in this market right now. (Oct 2008)

We will give you an overview of the basic requirements to qualify for a first time home loan. Remember banks compete for business and will have different options and benefits. You want to find the first time home loan that fits you like a glove.

General Qualifying Criteria for First Time Home Loans:

1. Must be a first time home owner to qualify for the special benefits.
2. The minimum entry age is 21, at some banks its 25.
3. The minimum income is R6 000 a month if you’re single or R10 000 for joint income. (Minimum at some banks R8 000 single.)
4. The monthly repayments on your home loan may not be more than 30% of your total monthly income (individual and joint.)
5. The minimum loan amount varies from R100 000 – R150 000.
6. Monthly repayments must be in the form of a debit order or direct deduction from your salary.
7. The home loan must be for your primary home, not a holiday house or for investment.
8. Stable, permanent employment. Some banks require at least two years permanent employment.
9. You must be a South African Resident.
10. You must have a clear credit record.

Other Features of First Time Home Loans:

1. Mortgage Protection (life assurance to cover the outstanding debt) is compulsory at most banks for first time home owners.
2. House-Owners Insurance cover (providing cover on property against natural disasters such as fire and storms) is always compulsory at any bank.
3. 108% Value home loans can be granted to help first time home buyers with the transfer and registration costs. (This facility may not be available all the time.)
4. The maximum repayment period is 30 years.
5. A fixed or variable interest rate option is available.

Documents Required to Apply for a First Time Home Loan:

1. Your latest payslip.
2. If you are not an existing customer of the bank you are applying at—three months bank statements.
3. Identity Document.
4. Identity Document of spouse, if applicable.
5. Marriage certificate, if applicable.
6. If you are self-employed: Latest financial statements, and a letter from an auditor or accountant who confirms the income.

When you have established what you qualify for you can start looking around for your first house. Once you have signed an offer to purchase you will complete your application at the bank. Remember to make sure that the offer to purchase includes the obtaining of finance in the form of a home loan as a condition. This will cover you in case the bank declines your application. The bank will send out a property inspector to value the house you want to buy.

If your application is approved you will receive confirmation thereof in the form of an official Letter of Grant. Legal documents will be sent to the bank’s attorneys to continue with the transfer of the property into your name as well as the registration of the home loan. Once registration takes place in the Deeds Office, the seller will be paid by the attorneys and your first home loan will be in place in the bank’s books and you will be the proud owner of your first home!

Few people will argue against the statement that owning property is still the best investment available. The earlier in your life you can enter the property market, the better. This should be one of your top priority goals and if you do not qualify yet start working towards that dream. How? Improve your life through studying as this will provide you with the opportunity to earn a higher income.

There is nothing like a dream to create the future. - Victor Hugo

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