What is a Home and Why is It Important to Be Able to Buy One
The home is a place that we live in. As a result, it is important to be able to buy one. A home is a place that a person lives in. It provides a sense of security, shelter and protection. Owning your own home or getting into the market of buying one can bring about feelings of stability, freedom and satisfaction.
What is the best location for my new home?
The best location for your new home depends on your lifestyle and what is important to you. If you want a location with a low cost of living, there are many areas in with affordable prices, however these are usually further away from the city centre and places of economic activity.
You may also want to consider proximity to work or schools. You can search for specific schools and neighbourhoods using web tools like google maps and google earth.
No matter which criteria you use, there are many great places to live.
How Much Home Can I Afford?
How much home can I afford? The answer to this question is not as simple as it may seem. There are many factors that go into the equation and it’s hard to get a one size fits all answer. To begin with, you need to calculate your monthly income. The bank will use this number and decide how much you can afford based on your credit history and other factors such as your deposit, your credit score, etc.
The next step is to calculate how much money you want to pay for a mortgage every month. You can use a mortgage calculator or an affordability calculator to help get started with this task. Then, simply enter the monthly mortgage amount into the affordability calculator along with any other debt payments you plan on making per month (credit cards, car payments, student loans, school fees, etc)
How Much Deposit Do You Need for a Home?
When purchasing a home, one of the most important parts of the process is making sure you have enough money for the deposit. This article will provide you with information on how much deposit is required to buy a house and what you can do if you need extra help.
The post will also include a link to a helpful calculator that will allow you to find out how much money you’ll need for a Deposit, as well as how much your monthly mortgage payments will be before taxes and insurance.
In order to buy a house, one must make a deposit. The amount needed may vary from person to person depending on their financial situation and credit history. A traditional 10% deposit is generally required in order to qualify for most mortgage bonds.
What legal cost are involved when Purchasing a home?
Home Buying is now more complicated than ever. There are now more experts involved, all with different sets of skillsets. Below are the typical fees charged for registering your home:
- Transfer fees ( Paid to the attorney for transferring a property to your name)
- Bond registration fees ( Paid to a bank’s attorneys for registering the Mortgage bond in your name)
- Bond initiation fees ( Paid to the bank for admin purposes)
- Transfer duties ( Taxes charge by government for property valued over the R 1 million mark as of 2021)
Transfer duties are calculated on the purchase price of the property. The seller pays transfer duties on the amount they receive, and the buyer pays transfer fees on the amount paid for their new home.
What other cost are involve after moving in to your home?
- Property rate (Charged by the municipality)
- Levies (Charged by the Body corporate of Home owners association)
- Electricity and Water
- Maintenance costs( e.g Grass cutting)
- Home insurance(Building insurance) (This type of insurance covers loss or damages to your property’s physical structure which includes any damage due to fire, wind, hail, vandalism, and so on)
- Home content Insurance (This type of cover protects your personal items against theft and accidental loss.)
- Life insurance that covers the mortgage bond amount in the event of retrenchment, disability and death
- Security cost (e.g alarm system)
Lets look at a practical example
In this example we take a look at a property based in Cape Town at R 900 000 with a mortgage bond over 20 years at prime interest rate of 7.25%.
Once Off Costs
| Transaction | Costs | Description |
|---|---|---|
| Transfer Fees | R 22 958 | |
| Bond Registration Fees | R 22 958 | |
| Bank Initiation Fees | R 6 038 | |
| Transfer Duties | R 0 | |
| Deposit | R 0 | Normally 10% Deposit, Banks Normally wave this for first time home buyers |
| Total | R 51 954 |
Monthly Costs
| Transaction | Costs | Description |
|---|---|---|
| Instalment | R 7 113 | |
| Property Rates | R 350 | It could be more depending on the size and location of your property |
| Levies | R 500 | Additional Cost in a sectional Title home(In a Complex) could be more or less |
| Home Insurance | R 200 | |
| Home Content Insurance | R 300 | |
| Life Insurance | R 400 | Can be bundled to your personal life cover |
| Security Cost | R 600 | If you stay in a security complex this could be removed |
| Maintenance Costs | R 400 | |
| Electricity and Water | R 1200 | This could be more depend of you family consumption |
| Total | R 11 063 |
These are typical cost involved when investing in a property. This means that for you have a smooth property process when purchasing your home, you will need to save up at least R 52 000 for the upfront cost. Then you will need to have a surplus of R 11 063 for you to afford this home on a monthly bases.
Furthermore, you will need to make contingency for interest rate increases and other inflationary increases.
Conclusion: How to Buy your Dream Home with the Right Mortgage
The right mortgage can be the difference between owning a house you love or not. The key to making sure that your mortgage is affordable and will suit your needs is to be well informed before you buy.
Useful links:
https://sisamaneli.com/buy-or-rent-a-home-which-home-ownership-method-is-the-better/
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