Property | couple holding up the keys to their new home

01 Apr 2022

Ultimate guide for first-time home buyers

Buying your first property is probably the biggest investment of your life so far. It is not a decision to take lightly, and making this long-term financial commitment can seem overwhelming. However, the steps to owning your very own home are not that complicated.

Here are our top tips for first-time home buyers.

Watch the video

 
Dr Sivuyile Madikana hosts this episode of In conversation for young professionals. He is joined by Nosiphiwe Balfour, Structured Property Finance Specialist at Investec Private Banking, Dr Nokukhanya Khanyile, Paediatrics Registrar, and Letlotlo Lenake, Research Analyst at Investec Corporate and Institutional Banking.
 
Dr Sivuyile Madikana hosts this episode of In conversation for young professionals. He is joined by Nosiphiwe Balfour, Structured Property Finance Specialist at Investec Private Banking, Dr Nokukhanya Khanyile, Paediatrics Registrar, and Letlotlo Lenake, Research Analyst at Investec Corporate and Institutional Banking.
  • Skip ahead

    [00:50]  How do you know the right time to rent or when to buy a property?

    [02:10]  What do you need to save for when you are interested in buying a property?

    [03:37]  What you need to know before you buy your first property

    [04:53]  How do you set a realistic price range to consider your affordability when buying a property?

    [07:32]  Is there merit in buying a property off-plan?

    [11:20]  Should you be paying more than the minimum repayment amount?

    [13:35]  What are the benefits of buying a property to rent, while living at home?

    [14:56]  The advantages of investing in property without owning property - listed property shares

    [16:06]  Some additional costs to factor in when, buying a property, are furniture and home decor  

    [14:18]  Lessons from the panel's experiences

     

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Dr Sivuyile Madikana hosts this In conversation for young professionals property podcast.
Frequently asked questions

Top tips for first-time home buyers

  • 1. Know what you can afford

    Do your homework and be realistic about what you can afford. The last thing you want at this stage in your life as a young adult is to be saddled with a long-term financial burden that will overstretch your finances and could prevent you from accumulating wealth in other areas.

    While confidence that increases in your future earnings will eventually compensate for any near-term austerity, it’s important that you allow yourself to enjoy your new home. That might mean additional capital is required for furniture and home decor. But remember that you can accumulate these assets over time as well. As Investec Research Analyst Letlotlo Lenake explains, your house doesn’t have to look like a masterpiece on Day 1.

    By understanding what your maximum affordability level is, you can go out and shop for that first-time home that meets all your requirements.

  • 2. Should I buy off-plan?

    Buying your first home off-plan allows you to save on transfer costs, as these costs are typically nil for buyers that the developer is first on-sells to. Do your due diligence hereby verifying that the developer is reputable and has the capabilities to complete the construction on time and to a sound level of quality.

    Especially if you do not have a large savings pool heading into the transaction, buying off-plan can definitely present a money-saving opportunity for you to take advantage of, as transfer duties are the biggest component of a property purchase price.

  • 3. Be aware of hidden costs

    In addition to transfer fees, do your research into the additional costs you will be required to pay towards your property. These can include anything from conveyancing fees, ongoing levies (including special levies) and municipal services, homeowners associations, and insurance. If you are moving into a communal residence or estate, understand what your levies do and do not cover in terms of maintenance and snags. Above this, it’s a good idea, too, to keep funds available for any unexpected maintenance requirements that can come with being a homeowner.

  • 4. Research the location

    Location is one of the most important considerations when buying a new home, as you want the value of your property to appreciate over time. Access to services such as schools, health facilities, retail centres, and greenspaces; security; traffic noise; and local infrastructure and maintenance are key aspects to consider in determining the potential capital appreciation of your home.

  • 5. Pay off your bond as fast as possible

    If possible, paying more than your monthly instalments require can significantly reduce the overall interest you pay on your bond, which can save you a lot of money in the long term. And though you may not be thinking so far ahead just yet, this can also benefit you when it comes to purchasing your next property, as you’ll be able to utilise those funds for a larger deposit.

  • 6. Buying to rent

    Buying to rent can be a sound investment strategy as the rent that you earn from your property can cover your bond, while still exposing you to the longer-term capital appreciation of your property.

    If you do not plan on living in the home, but still want to take advantage of the property as an investment, you can also consider investing in listed property shares. The advantage here is that you can essentially buy property without the additional costs of levies and maintenance, as well as the extra time and effort you will need to spend on acquiring and managing tenants.

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First-time buyer's checklist

Here is a handy checklist if you are buying a home – from preparation to the documents you will need, as well as the step-by-step process.

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