There’s a reason it’s difficult to qualify for a bond. It’s because banks understand the extra costs and the burden these costs may place on a homeowner. So even though you know you’ll be able to afford the monthly bond repayment comfortably, there are other costs you need to take into account before you so confidently say that that R1,2m home fits right in with your budget.
Lolly Unterslak, property consultant at Jawitz Properties Atlantic Seaboard, gives a breakdown of the costs you might not be aware of.
Remember: Special levies are payable by the seller if the levy was raised before the date of the transfer and was payable in full prior to registration of transfer. The levy will be payable by you, however, if it is raised after the transfer date or if it was raised prior to registration of transfer but is collected by the Body Corporate on a pro-rata monthly basis, in which case you will be liable for the monthly pro-rata amount after the date of transfer.
Not only does taking these possible additional costs into account help you prepare financially, it also improves your success at getting bond approval.
According to Adrian Goslett, regional director and CEO of RE/MAX of Suthern Africa, your total monthly cost, which include bond payments, levies, rates and taxes to name a few, should not be more than 30% of your income before tax. So knowing these hidden costs before even starting your property search or bond application process will greatly improve your chances.
Goslett says that in addition to questionning your affordability you should ask yourself the following questions before starting the home loan application process.
What is my credit score?
What is my annual income?
How much debt do I have?
What is my financial worth?
What kind of deposit can I put down?
Ideally your credit score should be reflecting a good payment history and that you are living comfortably within your means based on your total annual income. Your debt should be minimal with comfortable monthly repayments as this affects your disposable income. Banks will also consider your assets, anything from income-generating properties to vehicles, before deciding what you can afford. It is important that you save, as being able to put down a decent deposit will greatly improve your chances of getting your dream home.
Article originally from: HomeTimes