Buying a home is not something you do on impulse - often it takes years of planning and saving to be able to achieve. Here are the three main factors that will impact your ability to afford a home:
While there are some instances in which your bank might approve a bond with no deposit, it is not very common, nor should it be your first option. Putting down a deposit of around 10-20% not only means you’re closer to becoming a homeowner, but also reduces your monthly instalments and the amount you’ll eventually pay towards interest.
- Additional fees
The initial fees involved in purchasing a home are not merely confined to the deposit and monthly instalments. Other applicable fees include legal fees (to attend to the legal transfer of the property in your name), bond registration costs (only applicable if you take out a loan), and transfer duty (payable to SARS, and only applicable to properties with a purchase price of more than R1 million). Make sure you are aware of these costs by consulting with your property lawyer before taking the plunge.
Consider all your monthly expenses, including existing repayments on debt (such as car financing, student loans, etc.) and make sure that you can afford the monthly bond repayments comfortably. A poor credit score will also impact your ability to receive affordable financing. Your monthly bond repayments are not the only expenses related to property ownership either. You also need to consider the applicable monthly rates and taxes and levies.