First-time Homebuyers - The power of choice always seal the best interest rate deal!

Buying a property is a big decision and a big investment. The entire process can seem overwhelming for a first-time buyer – but it doesn’t have to be if you stick to a few basic home buying tips.

Buying a property is also the biggest transaction an average person will do in his or her life.

Affordability issues has increased the average age of SA’s first-time homebuyer by three years, over the last decade, to 36 years old, according to the latest data from ooba Home Loans with the volume of home loan applications from first-time homebuyers having declined from a peak of 56% of all applications in June 2020 to 46% in May 2024.

It is therefore very important to be well-informed about which banking products are available for first-time buyers – as per the attached comparative information table about the so-called big-4 banks in South Africa.

1.         Ensure that you shop around for the best home loan deal

Before you start looking around for property – ensure that you first determine what you can afford by getting pre-qualified by a home loan specialist.

Contact our CCH member agents, so we can refer you to the best home loan consultants we have been working with. They will ask you to submit a single application to them, so they can apply to multiple banks, including your own. They will negotiate with all the major banks to get you the best home loan deal.

Their service to you is completely FREE!

2. Use FLISP – Government subsidy for first-time homebuyers

If you earn between R3 501 to R22 000 per month, you will be encouraged to know that the South African government is subsidising home purchases for first-time buyers. The subsidy is known as FLISP (Finance Linked Individual Subsidy Programme) and it benefits first-time home buyers by improving their chances of home loan approval, and providing funds that can be used for a deposit or home loan repayment. The subsidy ranges from R30 001 to R130 000, depending on the size of the homebuyer’s income.

• It increases the chances of home loan approval because the bank knows that you have funds to pay off the home loan thanks to FLISP.

• It reduces interest rates by making you a lower risk, thus making the bank more likely to grant you favourable interest rates.

• It can serve as an extra payment into your bond. Any amount you pay above the stand monthly repayment of your bond will naturally help you pay off the bond faster, and also potentially lower your interest rates. 

3.         Home buying tips for first-timers.

Buying your first home is exciting, but it can also be a little scary. Make sure your joy is not overshadowed by concerns about debt with our home buying tips.

3.1 Check what you can afford

Before you even start looking for that dream home, work out what you can afford.

See how much the sales process will cost you with our bond and transfer cost calculator

Our Home Loan calculator will give you an idea of how much you can borrow, and how much your monthly bond repayments will be.

3.2 Factor in the extra costs

Buying a home comes with some once-off additional costs: the deposit, transfer duties, conveyancing fees and deeds registration fees. There’s also the cost of running a household.

Apart from the levy or rates and taxes, you may need to maintain a pool, hire a garden service or pay for security. You’ll also need to consider Building Insurance.

If you are buying in a sectional title complex, you are within your rights to request the financial statements to ensure that the property is well managed by the body corporate or its agents, and is in good financial standing with its creditors.

It is also a good idea to find out if there any special levies pending. A special levy is a tariff charged in addition to the regular levy over a fixed period. These funds are collected from owners to pay for big investments such as security upgrades, painting or significant maintenance. An impending special levy will impact your costs in the short-term.

3.3 Know what you are buying

You may view a lot of homes in your search for the right one. Learn to see past the furnishings. Do the walls or plaster show any signs of damp, or are there any structural cracks? Is the roof sagging? How’s the neighbourhood in terms of location and security?

Consider hiring a home inspection services company to inspect the property before you submit your offer. Home inspectors check for dangers including:

• Structural damage
• Water seepage and damp
• Faulty electrical, plumbing and gas installations
• Rotten timber
• Hazardous materials (such as asbestos, lead-based paint and toxic moulds)