How young buyers can buy their first home in 2021
PUBLISHED 9 FEB 2021
Buying your first home in Cape Town is a major financial milestone and could potentially be an excellent investment that will boost your net worth in the future.
But, as with all important decisions it’s worth taking a little time to plan financially before you sign your offer to purchase. Here are a few important things to bear in mind as you take this important life decision in 2021.
Before you apply for a bond
If you’re a first-time property buyer you may already have questions about financing your home.
Let’s take a look at the steps involved and what you can do to maximise your chances of approval.
There are two crucial questions you’ll want to ask yourself before you submit a bond application:
How much do I need to borrow?
Do I qualify for this much financing?
Answering these questions - and doing the necessary research that each one entails - will put you firmly on the path to home ownership.
The total amount you’ll need to borrow from the bank to purchase your home depends on the purchase price you agree to with the seller and the amount of money you’ve saved for your deposit.
Financing a R1 million property with a 100% bond is more than possible for most working professionals, but if you had R100 000 - R200 000 available as a deposit you could boost your chances of approval substantially.
Most banks and bond providers prefer their customers to borrow prudently so that their monthly payments don’t exceed a third of their take-home income.
For this reason, you may want to apply for pre-approval from a mortgage provider like Ooba or BetterBond. Take note of the total bond amount they’re willing to finance, and then begin your property search with an amount in mind.
How to improve your chances of approval in two easy steps
Before you submit your bond application it’s important to obtain your free annual credit check and make sure that your credit score is above 600 to boost your chances of approval. A score in the 800s or 900s is ideal.
If you have existing debts such as personal loans and credit card balances, you may want to pay these down before applying since your debt-to-income ratio (DTI) will also affect the outcome of your bond application.
With your financing in place, you’ll be ready to start browsing home listings and scheduling viewings. At Cape Realty we have a wide selection of properties to suit all budgets and space requirements. Contact us today to get started.
Image Credit: https://pixabay.com/photos/sale-sold-hand-signature-house-3701777/