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How to be streetwise when you are a first-time home buyer

How to be streetwise when you are a first-time home buyer

Purchasing one’s own property is an important milestone in every person’s life.

It is therefore in the interest of the prospective buyer to have, at least, a basic understanding of the process when investing your hard-earned money into purchasing your first house/property.

It will certainly benefit first-time home buyers to empower themselves by going onto the internet and researching the process involved, for example “Tips for First Home Buyers” or any other related topics. Having a basic understanding of the step by step process followed in purchasing your own house or simply the terminology used, will instantly make it easier to engage with the key role players in the process, like estate agents, banks/financial institutions, conveyancers, etc.

In addition to property prices, it is important for the first-time home buyer to know and understand the transfer costs involved when purchasing your property, e.g. deposit amount, transfer duties, bond registration fees, transfer fees, etc.

It is therefore important to realise that the decision to invest in an asset like your own property, must not be made hastily but should rather be a well-considered and planned process.

Discussed below are a few tips on what to look out for when investing in a property.

Crunch the numbers first
As part of the aforementioned empowerment process, it is advisable to use the internet and other resources available to familiarise yourself with the property prices in the residential areas you wish to buy in. Affordability plays a key role when a first-time home buyer contemplates purchasing his/her own property. Developing a realistic home budget that includes the rental you are currently paying, is an important exercise to undertake.

Armed with the information of property prices in your preferred residential area, mandatory transfer costs, insurance costs and your personal housing needs (like the number of bedrooms and bathrooms, etc.), the prospective home buyer can decide whether his/her gross income will allow him/her to purchase the desired property.

To assist with your affordability forecast, it is advisable to use bond originators that will take into account your affordability. These systems will not focus merely on the primary banks but additionally take into account other banks or financial institutions that may offer you different credit and interest rates. Alternatively, one’s own personal banker can also assist in calculating the overall bond costs and the monthly premium that the prospective buyer will pay.

Enquire about the building plans
It is always advisable to enquire whether the building plans of the property you are purchasing, including any alterations made thereto, have been approved by the local City Council. Alterations made without the approval of the City Council, will become the new owner’s problem and you will face cost implications when submitting building plans that should have been submitted previously by the current home owner, with no recourse against the current owner.

Ensure the credibility of compliance certificates
Given the problems that sometimes arise with the authenticity of the plumbing and electrical compliance certificates, it is advisable to inform the Estate Agent and the Transferring Attorney involved as soon as possible that you wish to inspect the accuracy of these compliance certificates before transfer occurs. Should this not be possible, request the information of the governing bodies that the plumber or electrician are affiliated with, in order to ensure their authenticity.

It might be worth requesting that an independent certified plumber and electrician accompany you, at your own minimal cost when you inspect your new house. The objective will be for them to carefully talk you through each report or inspect the house with you should you not have received the reports as yet. They are then in a position to advise you where you might have been short changed, e.g. a water geyser that might not be functioning well or hazardous electric installations. Should you like to enforce any work post-transfer, the independent bodies charge a fee to inspect the property before they can force the plumber or electrician to fix any defects at their own costs. Should there be any defects, if you are the buyer, you can claim the fees paid for inspection from the purchaser. However, that will, again, require additional expenses.

Therefore, it will be that much more difficult to get the seller eager to rectify plumbing and/or electrical problems which may have been identified by your plumber and electrician once the transfer documents have been signed.

The exercise outlined above, has become critical given the prevailing difficult economic circumstances in the country which makes applying for financing almost impossible. Armed with the information collected above, the prospective buyer will be able to make an informed decision.

At SchoemanLaw Inc. we can assist you with property transfer advice and ensuring you have a smooth transfer. Contact us today.

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