Points to ponder when buying your first home

While buying a home may be exciting, there are many pitfalls that first-time and even second time home buyers could fall into along the way, says Simon Bray, chief executive of Private Property, one of the headline sponsors at the Property Buyer Show Gauteng taking place in October.

Here are his key points to keep in mind when buying your first home:

If you’re battling to get onto the housing ladder or are keen to buy an investment property, applying for a home loan with someone else can improve your chances. A joint application increases your chances of qualifying, as both parties’ incomes and expenses are considered when the bank assesses affordability, and by combining both salaries you will be able to buy a more expensive property than you would otherwise be able to afford on your own.

If both parties have good credit records, there is a strong likelihood that the home loan application will be approved, and you could benefit from a better interest rate. And by buying with someone else you will only pay half of the bond payments and legal fees.

However, there are some cons to bear in mind at the same time. Partners are jointly responsible for the total monthly bond payments, so if one defaults on payments the others will have to cover the amount owing as well as the sum they have to pay in.

Any default in payment to the bank will result in all partners’ credit records being affected. If one partner wants to sell his share, the partners taking over that share will be responsible for paying the transfer duty on it as well as any outstanding rates and taxes.

Should one partner want to pull out of the bond agreement, the home loan facility will be closed, and a new bond application will have to be submitted and bond registration fees will be payable for the new home loan.

Another point often overlooked by first-time buyers when considering costs and affordability is insurance and what you will need for your home. Bray says the following are key policies all homeowners should have:

Homeowners building insurance specifically covers the structure of a home against accidental loss or damage caused by fire, theft or natural disasters like storm damage. Depending on the insurance company, the cover can also extend to include other structures like your garages, greenhouses and swimming pools, as well as permanent fixtures around the house like baths, toilets and fitted kitchens.

Some policy suppliers also offer personal liability cover in addition to the building insurance policy. This is to specifically protect property owners from any third party claims. The personal liability cover offers financial protection for property owners should a third party lay a claim against a homeowner for accidental death, injury or illness which may occur on their property. It also offers homeowners financial protection for accidental loss or damage to a third party’s property.

Home contents insurance is designed to cover household goods against loss or damage caused by accidents like theft, burglary, fire, malicious damage, and/or natural disasters like storm and flood damage amongst others.

Personal valuables insurance is a policy separate from homeowner’s insurance and home contents insurance. This policy covers any personal valuables that a homeowner would usually carry or wear outside their home, like clothing, handbags, laptops, bicycles or even jewellery.

To speak with Private Property for more advice on what to consider when buying your first home or an investment property, visit the Property Buyer Show Gauteng which will be taking place on October 28 and 29 at the Sandton Convention Centre.

Visit www.propertybuyershow.com.