10 Nov 10 Important Questions First-Time Homebuyers Ask.
Buying a home for the first time is exciting, but it’s also confusing. There are so many new concepts, legal steps, banks, attorneys, costs, and processes. When you’re buying a home for the first time, you may make emotional decisions instead of informed ones.
From working out how much you can afford to understanding hidden costs and legal steps, first-time buyers often have the same big questions. Below are the top ten, answered in plain language.
1) How Much Can I Realistically Afford Each Month, and How Do Interest Rates Change My Repayment?
Affordability determines everything, not just the purchase price, but also your ability to qualify for a bond. In South Africa, banks primarily consider your net income, disposable income, and debt-to-income ratio. As a general rule, banks won’t allow your bond repayment to exceed around 30% of your gross monthly income, but this varies between banks.
The part first-timer buyers tend to forget: interest rates change repayments dramatically. If the repo or prime rate rises by 1%, your repayment can jump by hundreds or even thousands of rands per month. Before you view properties, use a bond and transfer cost calculator to test different interest rates and different loan amounts. Don’t shop for dreams, shop for what you can comfortably pay for.
2) Should I Apply Directly With My Bank or Use a Bond Originator?
A bond originator submits your bond application to multiple banks at the same time. They negotiate on your behalf, and they don’t cost you anything directly. They earn their fees from the bank if the bond is granted.
If you apply only to one bank, you only get one offer. If you apply through an originator, you may get more than five offers, enabling you to compare rates and choose the best one. In South Africa, banks compete aggressively, especially for first-time buyers, so it’s usually smarter to compare. In most cases, using an originator gets you a better interest rate or better terms than approaching a single bank by yourself.
3) Do I Need a Deposit, and Can I Still Get a 100% Bond?
Yes, 100% bonds are still possible. In fact, first-time buyers often get them. But banks are becoming more selective, and if you have a deposit (even 5% to 10%), it dramatically reduces risk for the bank and improves your chances of approval.
The biggest misconception is that a deposit is there only for approval. No, it also reduces your monthly repayment for 20 years. If you can save 5–10% before you buy, do it. It may shave off tens of thousands in interest over the lifetime of your bond.
4) What Other Costs Must I Budget For?
Transfer costs are separate from your purchase price. They are payable in cash, not financed in your bond. Many first-time buyers are surprised to find out they need to pay transfer costs.
You generally pay four categories of costs:
- Transfer duty, unless the property is newly-built and VAT inclusive
- Transfer attorney fees
- Bond registration attorney fees
- Admin, deeds office and minor disbursement fees
You may also need to budget for:
- Property inspector fees (optional, but highly recommended)
- Moving costs
- Security upgrades (often immediate)
5) What Is a Conveyancing Attorney, and Do I Choose Them?
A conveyancer is a specialist attorney who handles the legal transfer of property. South African law requires conveyancing to be done by an admitted conveyancer, not a normal attorney. The seller chooses the conveyancer in the majority of sales, not the buyer. But that doesn’t mean you cannot ask for your preferred attorney. Conveyancers protect the legal integrity of the transfer, including:
- itle checks
- Lodge documents
- Collect compliance certificates
- Handle guarantees
- Ensure the property is properly transferred into your name.
6)How Do I know If the Property Is Fairly Priced?
Don’t only look at the asking price. Look at recent sales in the neighbourhood. Use evidence, not emotion: talk to your agent about area trends and whether the price is realistic given the condition, location, and market activity.
Look at:
- Recent sales in the same street / same estate for an indication of what the going rate is
- The condition and age of the home
- Days-on-market trends
- Whether similar homes sat unsold and find out why?
You can also ask your agent for CMA reports (comparative market analysis) and the past three to six months’ sale records in that area. Many homes are advertised 5%–10% above what the owner expects, so room for negotiation is normal.
7) What If the Bank Valuation Comes In Lower Than the Purchase Price?
This is one of the most painful and least understood issues. Banks lend on the valuation, not the asking price.
For example, if you agree to buy at R1 200 000 but the bank’s valuation says it’s worth R1 150 000, the bank will treat R1 150 000 as the true value. They will then finance only according to that number, not what you agreed to pay. YIn this scenario, you will need to negotiate the price or pay the difference in cash. This is why the valuation stage is critical; don’t assume the market value matches the listing price.
8) How Long Does the Transfer Take, and What Tends to Delay The Process?
Typical transfers in South Africa take between eight to twelve weeks on average. Delays usually come from:
- Sellers taking too long to sign the transfer documents
- Municipalities delaying clearance certificates
- Compliance certificate issues (gas, electric, beetle, etc.)
- Bond approval admin delays
Your responsiveness has a real impact. If your attorney emails you today, do not wait three days to respond. Any time lost will lead to a delayed transfer.
9) How Do I Check If the Body Corporate or HOA is Financially Healthy?
Simply ask for the last 12 months’ financials and AGM minutes. If levies haven’t been raised for 3+ years, that’s a red flag, not a win. It usually means they’re avoiding increases to look good on paper but have no money for reserves.
Key things to look for:
- The value of the reserve fund
- Arrear levy collections, which is a bad sign if they are high
- Special levies should be investigated.
10) How Do I Protect Myself from Hidden Defects?
The voetstoots clause still exists, but it does not protect sellers if they knew about a defect and failed to disclose it. To protect yourself:
- Hire an independent home inspector before you sign
- Insist on clause amendments that note known defects
- Walk through the property with your agent and check roofs, damp, boundary walls, geyser age, electrics, and gutters
In conclusion, becoming a homeowner is not just an emotional milestone. It is a financial strategy decision. The more informed you are, the less likely you are to overspend, be misled, or regret your purchase.
By asking and answering these ten questions before you commit, you’ll be far more confident, far less vulnerable to surprise costs or legal snagging, and better placed to make a decision you’ll be glad you made.
TAKE YOUR NEXT STEP WITH INTENTION
The most powerful buyers in South Africa right now are not the wealthiest; they are the informed buyers. They are the ones who do the homework, ask the right questions, understand how rates and affordability work, and make decisions with clarity, not fear. Contact AWD Law for professional property advice
Kindly be advised that AWD Law does not enter into litigation on behalf of clients. Our conveyancers specialise exclusively in the development of vacant land, property transfers, bond registrations, administration of deceased estates and notarial practice. Should you require assistance with a litigation, kindly contact The Legal Practice Council.
Contact AWD Law For Professional Property Advice before signing your Offer to Purchase.
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