Residential News

The First Time Homebuyer’s How-To Guide


South Africa is currently in the midst of a buyers’ market, with house prices dropping by 4.8% in the last decade[i] – ideal opportunity for first-time homebuyers to purchase property. Over and above affordable property prices, first timers are benefitting from banks becoming more generous in their lending[ii]. Banks are extending the threshold of 100% loans to qualified buyers, and in some cases even 105% loans to cover the transfer costs and registration fees[iii]. So how do first-time homebuyers go about taking advantage of these conditions?

Andrew Price, Director at MortgageMe, South Africa’s latest fully automated bond aggregator shares the following tips:

Step 1: Audit

Before you begin the home buying process, you need to see if you can actually afford it. This will require doing a thorough audit of your finances to see what you can comfortably afford to spend on a house.  Once you have calculated all your monthly expenses to see what disposable income you can put towards paying off a home loan, you then need to figure out the price range you should be shopping in.  You can use the bond calculator on the MortageMe platform to help you determine this. Enter your gross monthly income, the interest rate as well as the repayment term and it will tell you the home loan you can afford.

Step 2: Find a suitable property

Hunting for properties online is not only convenient, it also helps you find suitable properties since most property websites can be browsed using specific filters which means you can select your criteria and only see homes that fall into that category. Once you’ve contacted the estate agent attached to the property, you can view it in person and take it from there.

Step 3: Make an Offer

If you’re making an offer as a first-time home buyer, you need to do your homework before negotiating with the seller. Look at the location and size of the property, the current economic and market conditions as well as the prices of similar properties in the area. All these must be factored in when putting in your offer.

The estate agent will serve as the middleman and will present your offer to the seller, which will then be accepted, rejected, or met with a counteroffer. When a final price is agreed upon, you’ll complete the formal offer to purchase. Once you and the seller have signed the document, you are both legally bound by it.

Step 4: Get Your Documents in Order

Here is a list of all the documents you will need when applying for a home loan:

  • A certified copy of your ID
  • A signed offer to purchase
  • Your most recent payslip
  • Bank statements from the past three months

Step 5: Finance Your Home

Instead of going from bank to bank to ensure you get the best deal on your mortgage, rather use a bond originator, like MortageMe.  Begin by completing a paperless online application. This will then be sent onto South Africa’s most trusted banks. While processing your application, they will validate the property details and assess your creditworthiness. If your application is successful, you’ll receive offers within 72 hours. Once your loan is approved – and if you accept the terms and conditions – the application will be finalised, and your attorney will register your bond.

Step 6: The Legal Stuff

After your finance has been approved and you have paid all costs to the transferring attorney, the transfer process will begin.

There are three types of attorneys involved in this process and they each have different roles. The transferring attorney is appointed by the seller to transfer the property into the buyer’s name. The bond attorney registers your bond at the deeds office. If the seller has an existing bond, a cancellation attorney is responsible for cancelling it.

Your attorney will contact you to sign the documentation and confirm which documents you need to bring along. To avoid delays, provide all documentation on time, pay your deposit and sign all documents when asked to do so.

Step 7: Move in

When moving into your new home, make sure that your insurance cover is comprehensive and immediate. You should also label all your keys and keep them in a safe place. Most importantly, enjoy owning your own home!

“Buying your first home needn’t be daunting, just follow these steps and your homeowning dreams can come true!” concludes Price.