Navigating the property market as a first-time buyer can be daunting, with the fear of making a costly mistake adding unnecessary stress. Understanding the most common errors can help you avoid them and approach your property purchase with greater confidence.
1. Not understanding your affordability: Before you begin your property search, take time to determine what you can realistically afford. Many buyers face disappointment when their home loan applications are declined due to affordability issues. Online bond calculators can provide a rough estimate, but remember that banks conduct detailed credit and affordability checks. As a guideline, your bond repayment should not exceed 30% of your gross income—or combined gross income if buying with a partner—and must fit within your budget surplus.
2. Not getting pre-approved: Getting pre-approved for a bond gives you a clearer picture of your buying power and strengthens your position when negotiating. Pre-approval involves a credit check and affordability assessment, resulting in a certificate that signals to sellers and agents that you’re a serious buyer.
3. Not using a bond originator: Although you can apply for a home loan through your bank, a bond originator can do this more efficiently. Bond originators apply to multiple banks on your behalf, increasing your chances of approval and helping you secure the best interest rate. Their services are free, as they're paid by the bank you choose. According to Ooba, using a bond originator can improve your approval odds by up to 36%.
4. Not thinking long-term: When buying your first property, it’s important to think beyond your current lifestyle. Consider how your needs might change over time—getting married, having children, working from home, or needing extra storage or parking. Transfer and agent fees make frequent moves expensive, so choosing a property that suits your medium- to long-term goals is a smart investment decision.
5. Making emotional decisions: Buying a home is emotional, but it’s important to stay rational. Don’t let excitement cause you to overlook important issues or waive your rights just to close a deal. Step back, evaluate the pros and cons, and ensure the property meets your practical and financial needs.
6. Skipping a home inspection: Even if a home looks perfect, hidden defects can result in costly repairs. A professional home inspector can assess both visible and hidden (latent) issues such as dampness, structural damage, or poor plumbing. Many sale agreements include a 'voetstoots' clause, meaning the buyer accepts the property as-is, so it’s crucial to uncover any problems before signing.
7. Not asking for building plans: Don’t assume a property has approved building plans. If your offer to purchase doesn’t request them, you won’t be able to demand them later. Missing plans may delay your bond approval or lead to complications if unauthorised structures exist. Always include a clause in the offer that requires the seller to provide approved plans.
8. Overlooking rates and taxes: Before committing, find out what you’ll pay in rates, taxes, and municipal services. These are based on the property’s municipal valuation and vary between areas and property types. Your estate agent can provide this information to help you understand the full cost of ownership.
9. Not setting up an access bond: An access bond allows you to withdraw surplus funds paid into your home loan, offering flexibility and long-term savings. By depositing extra funds—or even your salary—into your bond, you reduce the capital amount and save on interest. While you can apply for access later, it’s simpler and more efficient to include this feature from the start.
10. Underestimating the costs of home ownership: Bond repayments are just one part of the financial picture. Be prepared for additional monthly expenses such as insurance, rates, electricity, security, cleaning, garden services, Wi-Fi, and maintenance. Budgeting for these will help prevent financial strain down the line.
Buying your first home is a major life milestone. By being informed, planning, and seeking expert advice, you can avoid common mistakes and make a sound, confident investment.
* Tapfuma is a Certified Financial Planner professional at Crue Invest.
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