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Plan well when buying a house because it's the most important investment you'll make, writes Isaac Moledi

By unknown | Oct 09, 2007 | COMMENTS [ 0 ]

Isaac Moledi

Isaac Moledi

Buying property is probably one of the most important and solid investments you will make. But do we make well-informed and carefully thought-through decisions?

Experts say that when your decision is well-informed and carefully thought through, you will reap the benefits of a stable financial future.

Selling or buying a home is an emotional experience, so it is vital that you do your homework correctly, particularly in today's market which has quietened somewhat and where buyers are not queuing up to buy.

As South Africa's leader in home loans, with one in every three home loans financed by the institution, Absa has compiled valuable tips for home buyers:

l Do your homework. Establish your lifestyle needs and home requirements.

Gather as much information as possible. Read the weekly property guides, use the internet, visit local estate agents and show houses.

Before making any decision, look at a minimum of 20 properties in an area and try to become as informed about the local property market as possible.

Experts believe that sellers' understanding of the market is generally based on their perceptions from what they read in the press, what they have added on for improvements and also added for annual price increases.

Therefore, the way they calculate their selling price is usually a very rough estimate and may well be as much as 10percent to 20percent out of line;

l You need a strategy because some sellers are asking unrealistic selling prices. Don't act on a whim - know what's going on in the marketplace;

l Research the market. The best way to do this is to explore the market thoroughly and set time aside to visit properties on show days;

l Get the right financial help. Find out which products and services you qualify for and determine how much money you can spend on your repayments each month.

It is advisable not to let your home loan exceed 30percent of your single or joint gross monthly income;

l Decide between a fixed or variable interest rate. The monthly repayments on your home loan include capital and interest rates. So it is important to choose the right interest rate.

A fixed rate is a rate agreed between you and your financial institution which is fixed for a specific period of time.

If interest rates increase or decrease, your home loan repayments stay exactly at the level you have agreed on.

With a variable rate option, the interest charged on your home loan changes in line with the movement of the mortgage lending rates;

l Choose a home loan that is flexible and affordable. It is important to choose one that will fit your lifestyle and requirements.

Most financial institutions have a range of products that are designed to make homeownership more affordable and possible.


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