Buying property – be it a starter home, an upgrade for the growing family or a retirement spot – is an incredibly exciting time, but also a highly stressful period for your finances – especially if you aren’t well prepared. Eliminate the shock of unexpected costs by following these tips from Budget Insurance and SA Home Loans to help you save before, during and after your buy:
- Fatten up that piggy bank: Be realistic about how much you can afford to spend on a home and prepare your budget. Consider these costs: how big your deposit will be; how much your monthly bond repayments will work out to; transfer duty, attorney transfer and bond registration fees, as well as initiation fees. If you are looking for a fixer upper, plan for renovation costs.
- Check the insurance tick box: Make sure that you can afford insurance on the property – covering the bond, buildings insurance, home contents insurance and personal liability insurance.
- Optimise your credit score: The better your credit score, the better your risk profile and the higher your chances of getting a competitive interest rate. Make sure that all your accounts are up to date and paid regularly, check your credit score and address any problems before applying for a home loan.
The house hunting process:
- Security pays off: Living in a house and suburb with excellent security measures in place could result in a lower risk profile and better insurance premiums.
- Negotiate: Don’t be afraid to make a cheeky offer on the selling price. If you use an agent, make sure that their commission is competitive. The seller pays the agent, but a lower commission could see them being more flexible on the selling price.
- Off-plan: Buy a home off-plan in a development and you won’t pay transfer fees.
- Below a bar: Homes below R1 million are exempt from transfer duty, which saves you a significant amount of money.
Do a background check on the home you want to buy:
- Invest in an inspection: The valuation done by the mortgage provider only checks that your offer on the property is a fair value. Consider getting an independent inspection done on the property to check there are no faults that you have not seen such as subsidence, rising damp, roof problems and retaining wall stability.
- Debt check: Make sure the property you’re buying has no outstanding rates, taxes or utilities as you will not be able to open up a new account until that is paid up.
- One attorney, two boxes ticked: The seller has the right to choose the transferring attorney, but it’s advisable to negotiate with the seller so that the same attorney is used for transfer and registration, allowing you to negotiate a better fee for both services.
The big move:
- Cut the clutter: You could save a lot of money by having fewer things to move, so get rid of things you don’t need before you move. Removing these items from your insurance policy could also save you a significant amount of cash.
- Repurpose: Decluttering is good, but if there are things from your old home that you can easily repurpose and use in your new one, try to upcycle and reuse them to save.
- Goods in transit: Check if your insurer covers goods in transit and whether this option is also provided by your moving company. This not only protects you against a significant financial outlay, should goods need to be replaced, but also helps you not to double up on cover and pay more than you should.