Buying our first house

Dolby said:
Wow - I either didn't negotiate properly or something else is wrong ... but that's an awesome rate!
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I used BetterBond, best bond originators in town ;-)

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KaMoS said:
I just purchaed my first place. I'm with FNB and Standard bank offered me a 100% loan over 30 years BUT the interest rate was 9.95%. Whereas FNB offered me 90% @ 8.4% over 20 years. Needless to say, I took the FNB offer. The capital amount with Standard Bank was almost 3x more than FNB. My place cost 750k (market value 900k) and my transfer and bond costs came to a total of 35k.
My advice is, rent for a while and save up for that 10% deposit plus transfer and bond costs. It will save you a lot of money in the long run.

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FNB gave me 90% bond over 12 years at 12% interest and Standard Bank gave me 100% bond over 20 years at 9% seems to be different for people.
 
jacqvt said:
Well tell me then, why when my dad threatened, she phoned around and she managed to organize that my dad got fro 90 % loan to 100 %. So sorry to burst your bubble, but they have leverage.
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No.... all it is is negotiating.. the first offer was unacceptable but there was room to negotiate with the home loans devision from their first offer....

Do not think the homeloans division give two monkeys as to whether you move your business account elsewhere.... if you defaulted on the bond, the profit from your business account would never cover their liability on the property...
 
Standard bank does give up to a maximum of 104% loans to first time buyers. I know this because I got one in February/March of this year.
Now 4% isnt enough to cover all your costs, but I negotiated (refused to sign to allow the deal to go on) with the attorneys so they lowered their prices and in the end the 4% part covered all my costs. :D

P.S. the 100% part of the loan was at prime -0.5% and the 4% part of the loan was at Prime +1.5%. If you averaged it out, then I am paying Prime +0.028% for the total amount. :D
 
R35k for bond registration/transfer costs? WTF!!! the most I have ever spent was R17k in total!
 
czc said:
FNB gave me 90% bond over 12 years at 12% interest and Standard Bank gave me 100% bond over 20 years at 9% seems to be different for people.
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This a typo? Or are you serious?
 
Pixual said:
People who break their asses to pay off homeloans every month for like 20 years are not thinking right. Property ownership is seriously fraught with pitfalls and huge risks. Just paying back the bond is only the beginning. Maintenance and tax is a major headache.
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We all know that you pay more for a homeloan in the beginning, compared to renting. It's the years that follows where it gets better. Your salary goes up every year, but your bond payments stays the same (more or less). So salary wise, you're paying less and less for your house every year. Compared to renting where it goes up every year. But the best part is that after 20 years it's all paid off.

Most people never budget properly for retirement. They think as long as they have a pension fund, it will all be fine, but it never is. I don't know what my parents would've done if they didn't have a house that was paid off when they retired.

Maintenance and tax is not nearly such an issue as you suggest...
 
Roger.Wilco said:
We all know that you pay more for a homeloan in the beginning, compared to renting. It's the years that follows where it gets better. Your salary goes up every year, but your bond payments stays the same (more or less). So salary wise, you're paying less and less for your house every year. Compared to renting where it goes up every year. But the best part is that after 20 years it's all paid off.

Most people never budget properly for retirement. They think as long as they have a pension fund, it will all be fine, but it never is. I don't know what my parents would've done if they didn't have a house that was paid off when they retired.

Maintenance and tax is not nearly such an issue as you suggest...
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It depends on where you buy. A friend of mine who lives in a house just down the road from where I rent is paying more than half of what I pay in rent just to rates and taxes and insurance every month.

Sure, you will eventually pay off your house, but that's not the point I am making. The point is that many people suffer to pay off their homeloans, especially in the first few years when that disposable income could be used for more pleasurable things. The question you have to ask yourself is whether the suffering outweighs the long term benefit of owning your own home, because you only have X amount of life.

Things to take into account include:

- will a Nigerian drug lord move into the house next door to mine?
- will I be taken out in a car accident by one of these Hi-Ace drivers?
- will I be a victim of violent crime?
- will my neighbourhood's rates and taxes remain relatively stable?
- how easy will it be to sell my home if I want/have to move to another city?
- will I be able to afford the repayments if interest rates suddenly jump up a few percentage points?

Unfortunately in this country the probability of all these things actually happening to you are quite high and if you're suffering to pay back your home loan (especially when interest rates escalate) you're depriving yourself of a whole lot of living.

This is of course only my opinion, but it's based on several years of actually working as a mortgage loans analyst at a major bank during the 90's.
 
Pixual said:
It depends on where you buy. A friend of mine who lives in a house just down the road from where I rent is paying more than half of what I pay in rent just to rates and taxes and insurance every month.
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I find that very hard to believe...

Sure, you will eventually pay off your house, but that's not the point I am making. The point is that many people suffer to pay off their homeloans, especially in the first few years when that disposable income could be used for more pleasurable things.
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I'd rather suffer a bit more now, and not have to worry about where I'll live when I retire. What do you mean by first few years anyways? Most people can only afford to buy property when they reach around 30. Didn't that give them enough time to enjoy the "pleasureable things"?

Things to take into account include:
....
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You're probably one of those guys who stock up on food everytime someone predicts the world will end? ;)

but it's based on several years of actually working as a mortgage loans analyst at a major bank during the 90's.
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Sure it is. I'm actually working as a mortgage loans analyst as well...
 
Dolby said:
I'm specifically talking about your vehicle comment though ;)

They cover extras on a vehicle
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Nope. they only give you a loan on the car. If the car has extra's they do not finance it. So if you buy a landy with a roof rack ,old man emo suspention ,wheel spacers, huge sound system, turbo.. and and and. the bank does not finance that. they finance the full amount of the car though.
 
Roger.Wilco said:
I find that very hard to believe...

I'd rather suffer a bit more now, and not have to worry about where I'll live when I retire. What do you mean by first few years anyways? Most people can only afford to buy property when they reach around 30. Didn't that give them enough time to enjoy the "pleasureable things"?

You're probably one of those guys who stock up on food everytime someone predicts the world will end? ;)

Sure it is. I'm actually working as a mortgage loans analyst as well...
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Use it, don't use it.

I watched thousands of people lose their homes when interest rates peaked at 24% back in 1997. When an investment advisor tells you "safe as houses", run. Houses are not safe as investments. Not here and not if you're just an ordinary guy, working an ordinary job.

Personally I think property is way over valued in SA right now. There are less riskier things to invest in than property. The difference between paying rent and paying for a home loan (with all its associated maintenance and taxes) is substantial enough for me to want to continue renting. And yes, I have owned property before.

Please read Robert Kyosaki's Rich Dad, Poor Dad. That guy knows what he's talking about when it comes to property investing.
 
1. Look for a place you can easily afford. You can always upgrade at a later stage. Try and build up equity in your home by paying as much as you can afford each month. You may not get your "dream" place. But, the equity that you have built up can contribute towards a deposit on the dream home.
2. Try and get a loan at the bank where you have your transactional account. Most banks use internal ratings in the credit scorecard, and you will automatically be at a disadvantage if you have no history with the bank. If you are unhappy with the rate they offer, shop around, and then go back to your bank and ask for an escalation. There is a person (sometimes a team of people) who do rate escalation decisions in the home loans department. If you're still unhappy, go to the cheapest bank.
3. The more you put down as a deposit, the lower the rate you'll get as you are less risky to the bank.
4. Avoid originators (if possible) as they add around 0.5% to your rate (the banks still have to pay the originator)
5. Don't expect a 100% loan as a first time buyer. You may be fortunate and get it, but you would be the exception rather than the rule.
6. The banks don't finance transfer costs, lawyer fees and any municipal fees. These will be for your own account.
7. You may also find a bargain in FNB Quicksell (or the other bank's equivalent "assisted sales" programs)

Good Luck.
 
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