Thread by @ImcocoMash

So you are toying with the idea of buying your first property either to live in or for investment here is a Thread on what to look out for, what will make your life easier and where you can get easy wins.

A Thread

Start off by mentally preparing yourself for the process. Property wether bought cash or with a HL is a big purchase.

Firstly make sure that if you are buying cash you have factored in all costs of buying so that when you go looking for a property you are covered. For the sake of this thread I’ll focus on those using a HL to purchase. The process only differs by source of income

Ideally you need maybe 12 months to start preparing for the process. Start by getting your credit report from the major bureaus try @ClearScore so you can see what your credit history looks like because it’s something the banks will also be looking at.

Commit to improving the credit report by managing credit accounts, building credit history if you have none, checking for identity theft and clearing any judgements.

Then decide on a maximum amount that you want to pay for a property and a maximum installment amount you want to pay monthly. This is preliminary. Don’t worry about extra costs at this point. Remember we are 12 months before purchase.

Start paying the amount you want to pay monthly into a separate bank account. This may be hard if you are renting as that is probably the amount you will use to pay the bank. If this is the case then set aside 30% of your rental into a savings account.

Another option is to calculate 10% of your total purchase price and make that a savings goal for 12 months. E.g if the house is R900K then 10% is R90k. Divide that by 12 months and get an amount you must save monthly. This is if u are buying an investment property

Yes the idea for investment property is that the tenants pay your bond installment but tenants aren’t reliable and at the end of the day the bank has a contract with you. So you need to afford the installment.

The next step is to start viewing places. Even if you have no interest in buying those specific places. View so that you start understanding the jargon used by estate agents. So that you build liver to ask the hard questions and so that you can start spotting the tricks

At these viewings opt for the ones furnished and the non furnished. Real estate agents are good at playing with aesthetics. They play with space. Look out for defects. Teach yourself to spot trickery.

3 months before purchase get your credit report again. You should see some positive changes. Go to the online calculators and calculate affordability. That just an indication of what you can afford

Begin the process of looking for a Property. Keeping in mind the reasons for purchase. To live in now or for investment. I always say either reason but somewhere your willing to live for the first buy. This is so that if sh*t hits the fan and you need to move in it’s ok.

Remember price is as important as location, estate manager, demand of area, market status. You don’t buy the first house you fall inlove with.

Go and view the places you like which are within price range. Remember to always look for places at least R100K less that the preapproval amount or the affordability. DO NOT SIGN OTP AT FIRST VIEWING

Always arrange for a second viewing with a friend, engineer friend or someone who has bought before. Two or four extra eyes are always good. Ask questions about the property and owner. The complex, why are they selling. Check the house info on @FNBSA or @StandardBankZA incl value

When signing the OTP ensure that you read it. Then make changes that you are offering the seller. Amend the conditions of the suspensive clause so they suit your needs. Read up on voetstoots clause and the cooling off period. Look at the deadline dates for deposit/bond approval

TBC.....

Once you sign the OTP, go peep@that savings account and you should have some money saved for a deposit and the transfer costs. The deposit means you borrow less from the bank. The transfer costs are paid to transfer ownership of property and the duty is payable to government

After all due dilligence you can sign the OTP. If you have a deposit you will need to transfer it immediately to the transfer attorneys and they must invest it into an interest bearing account that sends you statements until the deal is completed

Then with your OTP you go to the banks looking for a loan in accordance to your conditions set out in the OTP. Very important to remember to always put what the purchase price is and how much deposit you have, this is a + for you.

If you are a salaried individual this is a fairly easy process for you. You submit OTP, personal bank statements, payslips, IT34 from sars and bobs your uncle. If you can afford it there is no reason why they won’t give it to you. Yours is to prove affordability and stability

They will do their credit checks and if they are willing to risk it all with you they will make you an offer. Don’t take the first offer you get providedyou have applied at more than one bank.

Remember the deal you want. That’s loan amount, interest rates, term period and account type. All this will push out a monthly payment you are comfortable with

Ok sharp the credit guys will do what they need to do. Then make you an offer. You will need to choose fixed or variable rate. Fixed means it stays the same for the remainder of the loan term and variable means it’s swayed by the market and if Tito/Kganyago changes the IR

You need to accept the offer or decline. Once accepted they will instruct bond attorneys. Mind you while all this is happening you will get progress report from sellers transfer attorneys. Of clearance certificates and bond cancellation if seller had a bond

The bank will then instruct their attorneys to register your bond. Note at this point there will be a loan initiation fee. If it’s not priced in the loan it’s an upfront payment. The transfer lawyers will also prepare docs for you to sign.

The bond will be registered, the transferring process will start and once all that is completed and you are due for first monthly payment then you must’ve received the keys.

If you need to move in before the process is completed you will pay the seller occupational rent. If there are tenants they will pay you. If seller still in the house they must pay you occupational rent.

If the house comes with existing tenants with a lease ensure you get a copy of the lease including the deposit they paid over. You will need to do an addendum of lease take over. Note it’s as lease is.

Once you get the keys you are now responsible for the rates and levies. Ensure that you change the municipal accounts into your name. There are companies that offer this service.

If you have bought into sectional title read the rules, understand that high portion is yours and your responsibility and what is for body corporate.

Get insurance for if something goes horribly wrong inside the house. Get life insurance or credit life cover for in the event of your inability to work for an income ; disease or permanent disability or the untimely event of your death.