Buying a property? How do you determine what you should pay?
Category Investing
Homeownership in South Africa is an exciting venture but requires more than just envisioning your dream home. Determining affordability is a crucial step that involves a comprehensive understanding of the financial landscape, mortgage affordability, and additional home costs.
"Resellebility is vital. A house you want to buy should cater not just to your needs but also to a greater audience. In a scenario like this, you can easily sell your home," says Martin Hayward, Principal Property Practitioner at Ikonic.
Does the Market Dictate the Price?
Understanding the dynamics of the property market is essential. While market trends influence property prices, balancing your dream home and financial prudence is crucial. Property prices can be influenced by various factors, such as demand, economic conditions, and regional development, making it crucial to navigate the market strategically.
Real estate experts emphasise evaluating your financial health before delving into property browsing.
Do Your Market Research
Before making any decisions, conduct thorough market research. Look into property values in the area you are interested in and consider potential future changes in the neighbourhood. Real estate professionals can provide valuable insights into local market conditions, helping you make informed decisions.
Defining Your Budget Blueprint
Your financial health forms the foundation of a realistic budget. Assess your monthly income, expenses, and existing debts. Calculate your debt-to-income ratio, a metric lenders use to evaluate your ability to manage mortgage payments.
Ooba has an incredibly useful tool to help you navigate.
Establish a budget that allocates no more than 28-31% of your gross monthly income to housing costs, ensuring your housing expenses fit within your overall financial framework.
Deposits, Bonds, Closing Costs, and Financial Surprises
Factor in the costs associated with purchasing a home. While a 20% down payment is often recommended, some lenders may allow smaller percentages. Calculate your potential down payment based on your budget and savings capacity. Additionally, avoid financial surprises and be prepared for associated costs like conveyancing attorney fees and other upfront expenses.
Bond Affordability
Mortgage affordability goes beyond the purchase price of the home. Lenders consider credit scores, deposits, and debt-to-income ratios. Utilise online mortgage calculators to estimate potential monthly payments based on different loan scenarios. Getting pre-approved for a mortgage is crucial. This enhances your credibility as a buyer and provides a clear understanding of the maximum loan amount you qualify for based on your financial profile.
South Africa's property market offers opportunities, and with prudent financial planning, you can turn your dream of owning a home into a sustainable and fulfilling reality.
Contact Ikonic Real Estate today.
For Real Estate professionals you can trust and rely on for industry-related expertise, contact us below for more information.
If you are looking to live in Silver Lakes Golf and Lifestyle Estate, Silver Stream Estate, Lombardy Estate & Health Spa, The Ridge Estate, Six Fountains Estate, or Willow Acres Estate and surrounding areas, then Ikonic Real Estate is your preferred property practitioner to assist you in all aspects of the selling and buying process.
Office Number: 083 452 5599
Cell Number: 083 452 5599
Email: martin@ikonic.co.za
Ikonic Real Estate holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority.
Author: Bryce Anderson