According to the latest statistics of the mortgage originator ooba, June was the 14th consecutive month of price growth for first-time property buyers, and the eighth consecutive month of growth in overall residential property prices. The average price paid by first-time buyers in June is up 13% to R682 042 from the same month the previous year, and 52% of the home loan applications received by ooba in June were from first-time buyers.
"This shows that first-time buyers have a healthy appetite for property right now," says Kevin Mountjoy, ooba national sales manager. "Given that banks have eased their lending criteria, the current interest rate looks set to remain stable at the current low levels, and house prices are increasing, this makes it a good time for prospective buyers to get into the property market."Check credit rating
The first thing that any bank will do when assessing your home loan application is check your credit rating. To avoid any nasty surprises or deal with any unresolved matters, you should check your rating before you get started. You are entitled to check your credit rating for free once a year.
"Analyse your income and expenses very carefully to work out what you can afford," says Mountjoy. "Bear in mind that home ownership comes with additional expenses and responsibilities beyond merely paying a bond. You will need to repair and furnish your new home, and additional expenses always crop up." You can use an online calculator like the ooba calculator (www.ooba.co.za/home-loan/calculators/bond-affordability-calculator
) to work out exactly how much you can afford to spend.
Banks are far more likely to grant a home loan if you have a deposit saved up. "It's good to aim at saving between 10% and 20% of the purchase price, although obviously the more you can offer, the better your chances of approval of your home loan, and at a favourable rate," says Mountjoy.Apply at more than one bank
Don't let your excitement about owning a new home prevent you from being cautious. "When you're considering a property, you should check for cracks, water pressure problems, missing tiles, holes in the roof, wiring problems and anything else that will need fixing or replacement," says Mountjoy. "It is the buyer's responsibility to acquaint themselves with the condition of the home, so make sure you've been thorough."
It makes sense to apply for a bond from more than one bank. This allows you to be sure that you have the best opportunity for an approval, and at a favourable interest rate. ooba statistics show that 48.1% of first applications were declined in June 2012; however, 27.9% of those applications declined by one lender were approved by another.