A step-by-step guide to buying a house in South Africa

Last updated on June 15th, 2022 at 07:34 am

It should come as no surprise that buying a home is a lengthy process because it is one of the most substantial expenditures you will ever make. While it may appear intimidating at first, you won’t be venturing into unknown ground. The path is well-marked, and skilled consultants are available to assist you along the journey.

If you’re not sure where to start, here’s an useful step-by-step guide to buying a home in South Africa, so you may approach one of the most significant decisions you’ll ever make with confidence:

Determine what you can afford

Before you begin looking for a home, you should have a good understanding of the financing options accessible to you. “In these days of stricter lending regulations from financial institutions, rough estimations of what you think you can afford just aren’t good enough,” says Rhys Dyer, CEO of ooba home loans, South Africa’s top house loan comparison service.

Also Read: 7 Legal Process of Buying Land in Kenya

Use a bond affordability tool like ooba’s Bond Indicator, which is a free, online tool, as a starting point. This will provide you your credit score, an overview of your affordability, and a reasonable estimate of your price ceiling.

Assess your credit record

In the eyes of your bank, your credit score is a large number above your head that indicates how risky you are. Your credit score tells your bank whether or not you’re a good risk based on your debt payback history.

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The credit bureau will issue your bank with a three-digit number ranging from 0 to 999 based on various calculations based on your transactional records. Naturally, the greater the credit score, the better, and one of the most precious personal finance assets you may have is a high credit score rating.

Find a real estate agent

While it is usually considered that estate agents primarily work for selling, they are also a valuable resource for home purchasers. “It’s true that anyone can look for a home and even take a look inside without the help of an estate agent,” says Rhys Dyer. “However, unless you have the time to make house shopping a full-time job, an agent will be able to match you with your perfect property much faster.”

Find an estate agent with whom you can form a strong working connection (consider asking friends and relatives for recommendations). Their understanding of the home market, as well as their ability to manage paperwork and negotiate with sellers on your behalf, will make the transaction go much more smoothly. Furthermore, because the seller pays their commission, their services are free.

Find your ideal home

Now comes the portion of the home-buying process that most individuals love the most: the house hunt. This is, of course, the most difficult aspect of the process, because it will all be for naught if you don’t discover a home that suits your needs.

Of course, before going on a property hunt, the first step is to have a clear notion of what those prerequisites are.

You can start looking for a home once you have a clear notion of what you want. Scheduling house viewings for weekdays (to avoid the weekend rush), taking your own photos (rather than relying on the agent’s photos, which are intended for marketing purposes), and coordinating your viewings so that they take place within a short window of time (otherwise, houses you view may be sold before you make your final decision) are all helpful house hunting tips.

Sign an offer to purchase

You’re ready to sign an offer to purchase once you’ve discovered your dream house and gotten your finances in order. This is a contract between you and the seller that spells out the terms and conditions of the property sale.

Keep in mind that “far from being merely an agreement, an offer to purchase is a binding contract; once you make an offer, you cannot easily change it,” as Rhys Dyer notes. Before signing an agreement, it’s critical to have a thorough grasp of what it contains. Keep in mind that the seller is required by law to report any known building issues.

Arrange a home inspection

A house inspection should be a condition of the purchasing agreement. This is your chance to find any hidden flaws in the property, and it’s critical that you understand your rights in this situation. For three years after the problems are detected, sellers are accountable for all latent defects in their property.

The seller will also get a copy of the report, and it’s up to you whether or not you want the seller to make any repairs.

Apply for a home loan

After you and the seller have reached an agreement, the following step is to get a home loan to cover the cost of your acquisition.

A home is a substantial investment, which is why banks have put in place a system to assist people in purchasing them within their financial means without having to file for bankruptcy.

Close the deal

So you’ve made an offer on a house and secured a mortgage… What’s next after your bond has been approved? The process is delegated to attorneys, who will manage the property transfer from the seller to you as well as the registration of the bond over your property.

Consider using the services of a house loan comparison site like ooba home loans, which, among other things, offers a variety of home loan calculators that may help you figure out exactly what you can afford.

Start with the ooba Bond Indicator, a free online prequalification tool from ooba home loans. After that, you can apply for a home loan if you’ve discovered a home that suits your needs.