First-time home buyers: A step-by-step guide to buying your first home
Finding a home is rarely the hard part. The hard part is knowing what the bank will lend you, what the extras cost, and what you’ve committed to once you sign.
This guide takes first-time home buyers in South Africa through five steps, from working out what you can afford to submitting your home loan application. For the full process from search to transfer, see our step-by-step guide to buying a home in South Africa.
1. How much home loan can you afford? Start with a pre-qualification
Work out what you can afford before you view a single property. Use our home loan calculator to see what your monthly repayment could look like at different loan amounts, then ask for a pre-qualification to find out what a bank is likely to lend you. A pre-qualification does not affect your credit score.
Knowing your budget keeps you looking at homes you can actually buy, and gives you a realistic picture of the deposit and costs you need to save for. A pre-qualification is an indication, not a guarantee. The bank makes its final decision once you submit a formal application with your documents.
2. The costs of buying a house in South Africa beyond the deposit
The deposit is only part of the cost. On top of it you will pay transfer duty, conveyancing fees and the deeds office registration fee. If you are taking out a home loan, there are also bond registration costs.
After you move in, rates and taxes, levies, utilities and maintenance become monthly costs. So do any services you use, such as garden service, pool maintenance and armed response. Property insurance covers you against damage or loss.
If you are buying in a complex (sectional title), ask whether any special levies are planned. These are short-term charges to fund major repairs or maintenance in the complex.
3. How to inspect a property before you make an offer
Look for signs of damp or mould, cracks in the plaster or foundation, and problems with the roof structure. Visit the area at different times of day, such as weekday mornings, evenings and weekends, to get a feel for traffic, noise and security.
Before you make an offer on a property, arrange for a professional to inspect the property for any defects or risks that could influence your purchasing decision or additional expenses in the future. Inspections usually cover:
- Water leaks, water damage and dampness
- Wood decay or damage
- Plumbing, electrical and gas installation defects
- Harmful materials such as asbestos or lead paint
- Structural or foundation issues
4. Offer to purchase (OTP): what to check before you sign
It’s important to have all the necessary information on the property you’re interested in purchasing. When you have found a property that fits your budget and requirements, you can then go ahead with an offer to purchase. Remember to proceed carefully. Withdrawing after signing an offer to purchase may result in financial penalties, depending on the terms and conditions of the agreement. If anything is unclear, ask before you sign.
5. Documents you need for a home loan application
Once the seller accepts your offer, you can submit your formal home loan application. Having your documents ready means fewer delays. As a salaried applicant you will typically need:
- ID document
- Latest payslips
- Recent bank statements
- Signed offer to purchase
- Proof of address
Self-employed? See the documents you need on our FAQ page.
Find out what you qualify for
Ask for a free home loan pre-qualification and we will check what the banks are likely to offer you. A pre-qualification does not affect your credit score.
Our service is free to home buyers.