Steps to owning your own home

We chat to Marius Marais, CEO of FNB Housing about what you need to know when it comes to purchasing your first home.

Most people don’t think about additional costs when shopping around for a home. What are possible costs to consider when buying a house?
Bond and registration costs, monthly rates and taxes, monthly electricity costs, deposit to the municipality and additional transport costs, if any.

Should one opt for a fixed interest rate or normal interest rate of 8.5%?
The choice of a rate is dependent on the economic cycle. One should consider whether the rate cycle is on the up or down-run trend before committing to the type of rate to choose. It’s always advisable to seek expert opinion before making such a decision.

What are the advantages and disadvantages of fixed and variable interest rate?
Fixed: One is guaranteed that one’s repayment will remain constant during the fixed rate period. This brings financial stability to the homeowner. The disadvantage of this choice is that if the rates are on a downward trend, you remain on the high interest rate for the fixed period.

Variable rate: When the rate cycle is on a downward trend, the homeowner enjoys the drop in interest rates. However, if the rates are on an upward trend, your interest rate will go up and the repayments will increase, placing an additional financial burden to the homeowner.

Can one have a joint bond but be the sole owner of the property?
Yes one can have a joint bond, but the joint applicants will both be liable for the repayments as joint owners of the property, and in the event of default, the bank will sue both owners.

Is it possible to pay for a year in advance in case you lose your job or can’t pay for a couple of months? Can you put such provisions in place?
It is possible to pay in advance. This can done by increasing your monthly instalment with an amount you can afford. This will assist in the event of financial difficulty.

How can someone that’s interested in property gauge whether expensive property is a worthy investment in the long run?
One needs to research the area he/she is interested in. Some areas may be on a decline and investing in such areas may have negative impact on the value of your property.

If you want to buy property and sell it in five years for a profit, what should you look for in the property or the market?
This is a specialist field where one is a speculator for profit purposes. With the market being as sluggish as it is, one needs to be an expert in the property market to invest for profit purposes. One cannot predict what will happen in five years and whether there will be growth or not in the property market.

In terms of pre-approved home loans – what should do before applying?
Pre-approved home loans are an indication for a potential homeowner, as to what price range must he look at in terms of the house price. It is also a guarantee that you have qualified for the approved amount and you can now search for a property. It is important that once approved, you do not engage in further credit as it may alter ones credit profile and affordability and the bank will then revoke the pre-approval.