Buying Your First Home: What you need to know

Buying a home is one of the most significant financial and lifestyle decisions you'll make. It’s more than a life goal; it's a smart financial move that builds equity and offers long-term stability. This guide will walk you through the essential steps to owning your first property in South Africa.

Why Buying Beats Renting (for Most)

Buying a home makes sense because it offers financial growth and personal freedom.

• You're Building Equity: Unlike rent, which is a monthly expense that disappears, your bond payment goes towards owning an actual asset.
• Property Could Grow in Value: In many areas, property appreciates by 5–7% each year, which is growth on top of what you've paid off.
• Long-Term Stability: You're in control, with no sudden rent hikes or surprise evictions from a landlord.
• Make It Your Own: You have the freedom to renovate, paint, and design your space as you want it.

Are You Ready to Buy?

Before you start browsing listings, you need to check your readiness for this long-term commitment.

Key Readiness Checks

What is a Home Loan (Bond)?

A bond is the money you borrow from a bank to buy a home, typically repaid with interest over 20 years.

• Variable Rate (Most Common): The interest rate changes based on the South African Reserve Bank's repo rate.
• Fixed Rate (Optional): Locks your interest for 1–5 years, offering predictable payments but usually starting higher.

Why Pre-Approval is Strongly Advised

Pre-approval confirms how much you qualify to borrow based on your financial profile.

• You're a **Serious Buyer**: Sellers and agents view you as financially ready.
• **Stronger Offer**: Being pre-approved allows you to move faster and potentially submit an offer without the "subject to bond approval" clause, making your offer more attractive.
• **Use a Bond Originator**: Services like Ooba or BetterBond apply to multiple banks for free to help you get the best deal.

Finding the Right Property & Costs

Finding the right property means balancing lifestyle with investment logic.

Key Property Choices

• Freehold (Full Title): You own the land and the building. Great for independence, but you're responsible for all maintenance and security.
• Sectional Title: An apartment or townhouse where you own the unit, but common spaces are shared. You pay monthly levies for shared maintenance and security.

Location is Everything: Look for a place close to transport, amenities (gyms, shops), and quality schools—these factors boost resale value. Check crime stats on Crime Stats SA and visit the area day and night for safety.

Upfront Costs (Beyond the Purchase Price)

*Some banks offer over 100% bonds in order to help buyers with the upfront costs.

Making an Offer to Purchase (OTP)

The Offer to Purchase is a legally binding contract once signed by both parties.

Key OTP Clauses

• Subject to Bond Approval: This clause protects you. Without it, you are still legally bound to buy even if your loan is declined.
• Voetstoots Clause: This Afrikaans term means the property is sold **"as is"**. The seller is generally not responsible for defects present at the time of sale unless they were deliberately hidden.
• Occupational Rent: If you move in before the property's official transfer (registration) is complete, you'll pay occupational rent to the seller.

Legal & Compliance Checks

The seller is responsible for providing several compliance certificates before transfer, which confirm the property meets legal safety standards.

The legal process, from OTP to the Deeds Office issuing an updated title deed in your name, usually takes **6 to 8 weeks** after bond approval.

Ongoing Monthly Costs (After Moving In)

Finally, it is worth considering the ongoing costs of owning a home. Please see breakdown below.