Despite the high interest rates, if you are in the market to purchase a property, there are a number things you should consider before making a final decision. Picture: Tierra Mallorca / Unsplash
Due to high interest rates, to buy property or not buy property can be a dilemma for many people, but if you’re leaning towards the former, here’s what you need to know.
Samuel Seeff, chairman of the Seeff Property Group said that for buyers, it is a good time to buy despite the higher interest rates because prices have been flat for two years which means they can find the same value compared to two years ago.
According to Andrew Golding, chief executive of the Pam Golding Property, in the current economic environment, the first thing that you need to do is to establish the amount you will be able to afford to ensure the property is in your price range.
These are the costs that you should consider along with the cost of the property:
– monthly repayments, monthly costs incurred as a homeowner, eg rates and insurance and monthly homeowner’s levy if the property is in a residential development or estate.
– transfer costs, transfer duty fees, bond costs, legal fees and the cost of moving to be considered.
According to Golding, having a good credit rating is extremely important, particularly if you require a mortgage loan.
People should also have a healthy amount of savings, because the greater the cash portion or deposit you are able to provide on a purchase, the lower the risk for both the seller and the bank.
The lower the risk from the bank’s perspective, the lower the interest rate offered to the bond applicant.
“The banks are still lending, and qualifying buyers can even find rate concessions. Deposit requirements are still below 10%, although first-time buyers can still find full 100% bonds and some banks will still go to 105% to include costs,” Seeff said.
According to Golding, when looking for your dream home, you should consult an agent that is reputable and has experience in the area in which you are looking for property.
Buyers need to ensure that the seller has settled all outstanding municipal rates so the transfer can go through.
“The attorney will not be able to lodge the documents in the deeds office without a rates clearance certificate from the municipality,” Seeff said.
Buyers are also required to pay a pro rata portion of rates in advance, which will be added to the purchaser’s pro forma invoice via the conveyancers.
If you are a first-time buyer, you should ask the agents for stats on the areas you are looking to invest in, to have an idea of the median growth in the area over time.
First-time buyers should do their best to obtain a pre-qualification from a financial institution so that they know exactly what they can afford prior to house hunting.
According to Golding, pre-qualification improves the likelihood of a bond application being approved.
IOL Property