Buying a home can be a thrilling adventure - if you can avoid the pitfalls. Find out what is involved and make buying your next home a positive experience.
If you’re first time buyer, you’ll need to understand the basics before making your first property investment.
- Types of property
- Types of homeownership
- What it costs
How does it work
The positive side:
- Homeowner’s often feel a real sense of pride, success and independence at actually becoming a homeowner
- A house you own can feel more like a ‘home’ than just somewhere to live, since you can choose how to decorate it, you can add to it, and if you want to keep pets you don’t have to ask permission
- When you rent, you will never get back the payments you make. When you have bought and have finished making payments, you have the reward of owning your property
- Most people pay off their mortgage before they retire and they can therefore keep living rent and mortgage free
- Although house prices do fluctuate, they have generally risen faster than inflation - so your home is not just a place to live, it can become an investment that increases in value
- By making regular payments to your mortgage lender and seeing the equity (or value) of your property increase, your credit rating is improved
Things to consider:
- When you become a homeowner it becomes much harder to just uproot everything and move
- Our economy can be fragile and in a downturn, there are no guarantees that property prices will remain stable - sometimes houses prices can fall dramatically and you could be caught in a negative growth cycle, where your home is worth less than what you bought it for
- Once you have been tied into a property you must keep up the mortgage repayments, utility bills, house maintenance and any unforeseen expenses or increases - should you lose your income because of illness or if you lose your job, you could run the risk of losing your home
Did you know?
- That there are benefits of having a deposit when applying for financing?
- You can have a good credit rating when you decide to buy a home.
Ready to find the home of your dreams? Here’s what you need to know when looking for a home.
While location is important, there’s more when buying your perfect home. We’ve provided you with few tips to help you find the right property.
Does it suit you?
Things to consider when deciding where to buy
- Is it convenient? While it’s important to consider the investment potential of the property, you will need to live in it and as such, it needs to first and foremost suit your lifestyle
- Are there hidden costs? Make sure you know all the costs before setting your heart on any property
- What is the area’s investment potential?
Browse property sites and magazines
Collect weekly property advertising supplements in the area you’re interested in, or simply go online to any of the property websites. This will give you a good idea of what is available and the current asking prices in various areas. You can also download the Absa homeowner app and search the property sales and rental markets through our partnership with Property24.
Contact an estate agent
An estate agent will be able to tell you about the profile of the suburb you’re interested in, the average cost of houses in the area and the future investment potential of the suburb.
Know the neighbourhood
This is a great way to get to know the neighbourhoods you are interested in. Check the proximity to your workplace, schools, shopping centres, medical facilities, a police station, a post office, your bank, public transport and anything else that is important to you. If a house is advertised as being in show you can take a look and get an idea of the types of homes available.
Making an offer on a home can be a challenging game; the seller wants more, the buyer wants to pay less. But keep in mind the laws of supply and demand when you make your offer – are you willing to pay a little more for your dream home, or are prepared to walk away from a less than perfect deal? Negotiate your way to the best deal by understanding the process of putting in an offer to purchase.
What’s a reasonable offer?
A few factors will affect what price you can expect a seller to accept.
- Current economic and market conditions (view our property research page for guidance).
- The location and size of the property.
- The accommodation and features of the property.
- Find out what price other similar properties in the area are selling for.
How do I make an offer?
- Let the estate agent know what you’re willing to offer.
- The estate agent will present this to the owner or the owner’s representative.
- They will either accept or reject your offer, or make a counter offer.
- Once the final price is agreed upon, complete a formal offer to purchase.
- Once you and the seller have signed the document, you are both legally bound by it.
The offer to purchase
- The offer to purchase regulates how the property is paid for, so make sure it suits your pocket and is in line with your agreement with the bank.
- Check that the property description, purchase price and other details are correct.
- It must include all the conditions you agreed to.
- It should state the buyer’s date of occupation and the agreed occupational rent.
- Delete any clause stating that the estate agent may deduct commission from the buyer’s deposit before registration and transfer of the property.
- It should state which fixtures and fittings are sold with the house.
- For properties with a value of less than R250 000 there is an automatic cooling off period of five working days, during which you can decide to cancel your offer – the agreement should stipulate this to avoid misunderstanding.
When you’ve found the one and you’re ready to commit, we’ll help you each step of the way, online or in person.
How to apply for a home loan
Did you know?
- There are benefits of having a deposit when applying for financing? Tell me more.
- Ensure that you have a good credit rating when you decide to buy a home. Tell me more.
Have everything you need to apply?
All you need to do is fill in your application online, or call us for guidance and to take the next step.
Before you start the home loan application process, you may want to check that you have all your paperwork ready.
You can save your online home loan application at any time and return to finish it later if you don’t have all the documents at hand.
Minimum supporting documentation
- A signed offer to purchase if you are buying a home
- A copy of your building contract/quote if you are building a home
Proof of income as follows:
If you earn a salary with a Transactional account:
- your latest payslip or
- a copy of your employment contract
If you earn a salary without a Transactional account:
- 3 months’ bank statements and your latest payslip or
- a copy of your employment contract
If you’re self-employed
- 2 years’ financials (no drafts)
- Your latest up-to-date management accounts if your financials are older than 6 months
- 3 to 6 months’ bank statements on any personal or business account not with Absa
- IT34 or IRP5 or a letter from a registered bookkeeper confirming your personal income
All other applications
Please discuss with an Absa consultant
Identification documents as follows:
South African citizens: RSA bar-coded ID book.
Non-South African citizens: Your passport. If you are a temporary resident in South Africa, include your Temporary Resident Permit from the South African Department of Home Affairs.
Trusts: The Trust Deed and Master’s Letter of Authority.
Close Corporations and Companies: CK1 or CK2 documents
Know what you can afford
Have you done your calculations yet? Our calculators help you figure out what you can afford and how you can save.
Any big investment warrants careful research before you take the leap.
Find out everything from what your monthly repayments will be, to how much you can save with a lump sum, to what it costs to transfer your home loan to another bank. When you’ve done your homework, take the next step confident in your decision.
Are you ready to start the application?
All you need to do is fill in an online application , or call us for guidance and to take the next step.
What to expect
When you apply for a home loan we assess your application in line with the National Credit Act. Find out what’s involved. Once you’ve applied for your home loan, we will assess your application and either approve or decline it, in compliance with the National Credit Act.
The assessment process:
- We’ll authenticate your identity as well as your income and employment information
- We’ll validate the property details
- We’ll then process your application
- We’ll assess your credit worthiness
- Finally, we’ll let you know whether your loan was approved or declined
- To avoid delays with your application, please make sure you send us the right information.
If your application is approved:
- You’ll receive an ‘approved in principle’ notice - this approval is subject to your acceptance of our offer
- If you accept the terms and conditions of the loan, the next step is a property valuation
- If we are happy with the valuation we’ll move you into the final grant stage, where your home loan application will be finalised
- After that we will instruct the registration attorneys to register your bond
- We’ll keep you updated on the progress until your bond is registered
If your application is declined:
- You can query the decision with Absa. Reasons why your application might be declined include:
- Based on the information you provided, our calculations show that you cannot afford the loan that you have applied for.
- The management of your existing bank accounts indicates that further debt could affect your current affordability.
You can track your application online.
Success! A new home is yours. Just a few more steps to securing the bond in your name.
When you register your bond, the property will be transferred into your name and a mortgage bond will be registered in favour of the bank that is granting the finance to you.
Below is a guide to help you understand the registration and transfer process. The conveyancers involved in the process will however advise you on the full process.
How does it work?
Transfer and registration process
- Three types of attorneys are involved:
- Transferring attorney: appointed by the seller to transfer the property into the buyer’s name
- Bond attorney: The bank (credit provider) usually nominates the bond registration attorney, who registers your bond at the deeds office
- Cancellation attorney: if the seller has an existing bond, this attorney is responsible for cancelling it
The process of transferring the property into your name only starts once your finance has been approved and you have paid all costs to the transferring attorney. If costs are included in the loan amount, the bond attorney will deduct this amount on the date that your bond is registered.
Transferring attorney’s role:
- If there is an existing mortgage bond over the property, the transferring attorney asks the credit provider for the title deed and cancellation figures, and sends a copy to the bond attorney
- The transferring attorney applies for a rates clearance certificate from the local authority
- You (the buyer) and the seller are contacted to sign the transfer documents and once this has been done, you pay the transfer costs
- The transferring attorney then pays the transfer duties, rates and taxes
- If there is an existing bond, the transferring attorney sends a guarantee to the cancelling attorney once all the guarantees have been received
Bond attorney’s role:
- The bond attorney lets the transferring attorney know what amount is available for guarantees
- They prepare the mortgage bond and mortgage loan agreement and as the buyer, you sign the agreement and pay all the costs
- The bond attorney then prepares and issues the necessary guarantees, which you must sign. They must ensure the funds are being paid out accordingly and forward the documentation to the transferring attorney, who prepares the documents for lodging in the deeds office
Cancellation attorney’s role (if applicable):
- The cancellation attorney cancels the seller’s bond on receipt of a guarantee for the outstanding amount owing
- The bank normally adds about 3 months’ interest to protect itself, refundable on date of registration of the bond, if the full required notice period is given
At this point the attorneys lodge all documentation at the deeds office. It takes two to three weeks for the documents to be inspected, after which final registration takes place.
Documents we will need
When the attorneys contact you to sign the documentation, confirm with them which documents you need to bring along.
- These are the basic documents you’ll need:
- Your identity document
- Your marriage certificate (if you are married)
- Your antenuptial contract (if applicable)
- You may also be asked to verify your income tax number and proof of residence, in terms of the Financial Intelligence Centre Act (FAIS Act)
Reasons for a delay
- You or the seller did not provide all your personal details
- The seller did not provide details of the credit provider holding their existing bond
- The seller did not provide the title deed and cancellation of their existing bond to the transferring attorney
- The seller delayed signing the transfer documents
- Delays in receiving rates and taxes figures from the local authority and/or the clearance certificate from the transferring attorney
- You did not pay the deposit – if this was a requirement
- Delays in providing guarantees
- You delayed paying home loan and transfer costs or delayed complying with your credit provider’s other requirements
- You delayed signing the transfer or home loan documents
- The seller delayed signing the transfer documents
- If the bond attorney, transferring attorney are different firms
To prevent delays, make sure you provide all the documentation on time, pay the deposit and all costs on time and sign all the documentation when asked to do so.
- Three types of attorneys are involved:
Finally, the long journey is over and it’s time to move into your new home.
Things to do before moving in
Plan your move
- Confirm a move-in date and time with the seller
- Book a removal company or arrange with friends to help you move
- Get packing – label the boxes, keep valuables in a safe place and set aside a box of essentials that you can use on moving day
- Visit the seller before they move out and ask them to show you where things like the fuse box and electricity metre are
- Make sure all the keys are labelled and left in one place – remember the outbuildings, windows and all doors
- Settle all your personal bills
- Make sure any insurance cover you’ve taken out is immediate
Make your move
- If the house has not been cleaned, have it cleaned before you unpack anything
- Put boxes in the rooms where they will be unpacked
- Start unpacking the kitchen boxes so that you’ll be able to make something to eat and drink
- Then move to the bedrooms so that you’ll have somewhere to sleep if you don’t finish in one day
- If you move in before the bond has been registered in your name, the seller could ask you to pay occupational rent
- The amount will have been stipulated in your offer to purchase and is usually about the same as the monthly bond repayment
- You will need to pay occupational rent while you are living in the house until bond registration takes place
Legal counsel deposit
- Some authorities require you to pay a deposit for utilities (such as water and lights) and a monthly fee towards rates and taxes
- This amount differs from local authority to local authority