Getting a Home loan in South Africa

Getting a Home loan in South Africa
Home loans in South Africa, First-time home buyer

You want to be a homeowner and settle down in your own place; at the same time, you are not sure how to go about the whole thing.

You have decided that you want to buy a home, and don't want to waste more money on paying rent.

First-time buying a home in South Africa

It is natural for you to be a bit nervous and to have many questions.

After all, this is perhaps the biggest purchase that you will ever make in your life. You want everything to go perfectly well without any obstacles or hassle.

The best way to get prepared for that major step is to be well informed about the home buying process. Knowledge is power and this is perfectly true in this case.

Here you will get all the information which you require for buying a home in South Africa. Use it to get all you want and more.

Make a Final Decision

If you have fears about buying a home, you should give this option more thought before going for it. Homeownership may not be the ideal thing for each and every modern person.

The choice depends on many factors including lifestyle, family status and occupation.

Renting vs buying – You may not be prepared to buy a home if you have insufficient savings or poor credit history. Similarly, renting involves fewer responsibilities compared to homeownership.

At the same time, when you rent a property, you will not be able to build wealth.

Reasons for buying a home – Generally, the benefits of owning a home exceed the benefits of rating. You will accumulate wealth. You will feel proud and happy with your home. You will be able to use this asset for taking out cash loans as well.

Keep these benefits in mind to give you confidence.

Homeownership & marriage – It is certainly easier to finance the purchase of a home when both you and your spouse earn income. Traditionally, most people buy a house when they get married and decide to have kids.

At the same time, you can buy a home with confidence if you are still single and have sufficiently high income.

Prepare Your Finances

There are many financial aspects to take care of before you can buy a home in South Africa. You have to know where you stand financially and what home loan options are available to you.

Step 1 – Credit report preparation.

Request the free credit report which you are entitled to and go through it carefully. Have any errors which you find fixed.

Perhaps the most important thing is to get rid of debt. Generally, the lower your debt is at the time of buying a home the better.

Step 2 – Finding a lender.

Consider as many lenders as possible and compare their home loans based on interest rate, fees and repayment schedule.

You should check what your bank has to offer since they may have a special deal for you as a loyal customer.

You may also want to interview a mortgage broker whose job will be to give you the most suitable deal for you.

Step 3 – Deposit preparation.

Virtually all lenders require you to place a deposit. This is the amount of money which you will pay out of your pocket when purchasing the house.

The bigger the deposit is, the smaller the loan will be.

This will increase your chances of approval and help you save money as well.

Step 4 – Government programmes.

You should check whether you qualify for a home loan subsidised or backed by the South African government.

You will certainly get a good deal with low interest rate and a small deposit.

Step 5 – Getting pre-approved.

If you get pre-approved for a home loan by a lender, you will have greater bargaining power when buying a house.

Get Professional Assistance for Buying a Home.

You can readily find for sale listings online plus tons of useful information. Despite this, working with a real estate agent remains the better option.

The professional knows the local market insights and has considerable negotiation experience.

Step 1 – Reasons for hiring an agent.

The professional will prevent you from making costly mistakes. They can help you secure the best deal as well.

Step 2 – Finding an agent.

You should ask around first and compare different service providers online. You should look for a professional with plenty of experience and high achievements.

Step 3 – Working with an agent.

You have to know exactly what the service will cost you and sign an agreement with the real estate agent. You should explain exactly what you want and ask all questions that you have.

Avoid Common Home Purchase Mistakes.

Find out what the most common home buying mistakes are and how to avoid them. It pays off to be prepared.

Step 1 – Forget about print ads.

You should search for a property online. This is the more convenient and most productive method as well since sellers and agents prefer using the web for advertising.

Besides, online you will find more pictures and more detailed information.

Step 2 – Avoid property search inefficiency.

You should not visit every home made available for sale. You should have your agent to preview the properties and arrange visits only to the ones which meet your requirements.

Step 3 – Do not make last-minute mistakes.

You should not make any big purchases or take out other loans before closing a home loan. You should protect your deposit with contingencies in your contract.

You have to be absolutely certain that you are buying the right house, especially when it comes to location.

Use Negotiation & Win.

There is plenty of room for to negotiate when it comes to home purchase in South Africa. You just need to know how to exploit the available opportunities.

Demonstrate commitment – You have to make your offer clear and concise as well as attractive to the lender. You may also want to provide personal details about you and your family. This is a great way to show the seller that their home will go to the right people.

Be competitive – When your offer has to compete with a large number of other ones, you should consider providing a larger deposit and shortening or waiving some contingencies. You should demonstrate that you have qualified for finance with a pre-approval letter.

Deal with a counter offer – If the seller makes a counter offer after you submit yours, you should negotiate further to reach an agreement.

Have the Property Inspected

You have to ensure that the home which you will buy is in excellent condition. For this, you have to get thorough and objective property inspection.

What's covered – Find out what the home inspection will cover and make sure that no important feature is missed.

Material facts disclosure – These are defects which may influence the buyer's decision affect the property sales price. Common examples include lead-based paint and asbestos panels. They must be disclosed by the seller.

Final inspection – Inspect the property once again on the day before signing the agreement to ensure that everything is as it should be.

Close the Deal

Given the required procedures for finalising a home purchase deal in South Africa, the whole process may take up to three months and possibly longer. It makes sense to book a moving service in advance to avoid further delays.

You should take care of the following as well.

Buy home insurance – You should do this as soon as possible. Shop around to find the best home insurance deal.

You may be able to get a great discount from your current insurer.

Consider sectional title insurance – It is designed for South Africans who live in sectional title units. Its purpose is to protect their household goods.

Get familiar with the closing process – This will give you a clear idea of how things will work out for you.

Now you can take the necessary steps for buying a home in South Africa.


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