Technology, the internet in particular, has made getting information much faster an easier than it was in the past. Buying a home is, for most people, the single largest investment they will ever make. Seasoned property investors know all of the ins and outs but for the less experienced, particularly first-time buyers, there is a lot know to know and learn. The better informed the buyer is and the better they understand the process the more confidence they will have in the purchase and the more power they will have in negotiations, be it with their bank or the seller.
With the recent economic downturn in many parts of the world, affordability is a big issue. Although the South African economy and property market did not feel the effects in the same way or to the same degree as other parts of the world, we have had similar problems with granting too much credit. The bottom line is, allowing people credit they cannot afford to repay is reckless and irresponsible. South Africa has tightened controls to a large degree and now make sure the recipient of the credit is able to afford the loan repayments.
As a general rule, your bond repayments cannot exceed 30% or your gross monthly income. This will include the salary of your spouse if you are married and any additional income you might receive from other avenues.
They will also look at your other expenses relative to your income. In other words, if you have expensive car repayments, high credit card repayments and other monthly financial commitments, this could make it difficult for you to qualify for a bond where the monthly repayment would be 30% of your income.
Before you can go house hunting, it is important to be informed and understand what repayments you can afford and what value bond you can qualify for. It is no good looking at houses that are way out of your affordability range so you need to be realistic.
The good news is, you do not have to spend hours at the bank or with estate agents in order to determine these factors.