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Dreaming of owning a house

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A Fin24 user living in Zambia has a dream of owning a house, but is not sure if he could get finance. He writes:

I have a dream to purchase a house worth $34 000, but the problem is I don't have the money.

I am looking for a bank that can help me make my dream come true. It will be the greatest day of my life if I were to have a house.

I am looking forward to your response.

Lusungu Kayela, licensee for Seeff Zambia, responds:

It is possible to obtain a mortgage offered by the banks.

You have to be on a permanent employment contract. The bank needs proof from your employer as they will ascertain the employment status as well as the income earned by the applicant.

The bank will also consider the age of the applicant. This helps to determine the payback period of the loan.

It is possible for you to purchase a house worth that amount in Zambia.

We as Seeff have a close relationship with most financial institutions and we could help you to secure finance.

Tony Ketcher of Seeff in South Africa, adds the following general tips:

Getting a bond however, as many property owners will tell you, can be a tedious process involving a lot of red tape.

The disappointment of not getting the bond that you apply for can leave you feeling despondent and frustrated.

Tony Ketcher, Seeff MD in Randburg says it’s because of this that Seeff strongly advises buyers to undertake a pre-application assessment from Ooba to assess their home loan qualifying ability before they start looking for property.

A pre-qualification assessment is generally conducted by a professional, prior to the estate agent taking you to view properties.

An expert will interview you and conduct a full income and expenditure assessment where after a credit bureau enquiry will be conducted to ascertain your credit risk profile.

Ketcher says it is important to always meet your monthly debt repayments on time and to pay the minimum monthly installment on your credit card in order to keep a healthy credit score.

Buying a home for the first time

Tony Ketcher, Seeff MD in Randburg says that first-time buyers’ judgement can easily be clouded by excitement and therefore it is extremely important to undertake comprehensive research and make fundamental decisions long before you start viewing show houses.

“The most important thing to keep in mind is affordability. Ask yourself repeatedly what you can realistically afford and establish your true affordability with a mortgage originator," says Ketcher.

As a guideline, your monthly bond instalment should not exceed 25% to 30% of your regular household income, before tax and deductions.

Also remember that banks today are granting fewer 100% home loans and, therefore, you should also ensure that you will be in the financial position to make a 10% down payment if necessary and still have enough money for transfer fees and bond costs over and above the purchase price.

Bond costs cover bond fees and deeds office levies and transfer costs includes transfer fees, deeds office levies and transfer duty.

The next step is to get into contact with an agent that you trust. Decide on a few areas first and then contact reputable agents in those areas.

Factors like proximity to your place of work, schools if you have children, and highways should play the most important role.

If you plan to reside far from work you should definitely consider the cost of fuel.

The right location will also influence the resale value of your property down the line – so choose wisely.

Thereafter you should determine exactly what it is what you are looking for in a home.

Start with the things that are non-negotiable like the number of bedrooms, a modern or older house, a house that has the potential to be renovated and then list the “nice-to-haves” like a swimming pool or a double storey home.

Don’t compromise on the non-negotiables, but consider price difference and location when it comes to the “nice-to-haves”.

Also, don’t be seduced by the first property you see. Take your time and look around carefully before you make a final decision.

Take into account things like rates and levies, home insurance, bond protection insurance, water and electricity, home repairs and maintenance.

These hidden costs can totally catch you off guard if not budgeted for from the get-go.

It is also wise to speak to someone who knows something about construction to avoid nasty little surprises after the purchase.

It’s also highly recommended to budget for possible interest hikes in the future.

Do your homework and remember the golden rules of purchasing property which are "research, research, research" and "location, location, location".

Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

- Fin24

Disclaimer:

Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.

Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
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