Now is a great time to buy a home as interest rates are at an all-time low. Ages and stages of life sneak up on us, so perhaps you are at that point you realise if you are going to own a home it better be soon and this could be the ideal time.
Sbusiso Kumalo, Chief Marketing Officer for African Bank, says with lower property prices and interest rates prospective homeowners will be able to pay off their bond over a 20 year period and save money on interest.
Of course when applying for a bond, all banks will review your credit score and this is where a good score is either going to come back and delight you or adversely, haunt you.
Kumalo says one cannot stress enough the importance of a good credit score, not only when applying for a bond, but also if you are just considering renovating and need a loan to make the necessary improvements.
“If you have a low credit score you are likely to struggle to get a loan at any store or bank, whereas a higher credit score increases your ability to access credit, like a favourable bond or loan.
“Understanding how your credit score is calculated will give you insight into how companies view you according to your credit history and how you manage your money. It also allows you to confirm that all debts against your name are correct,” he says.
3 tips for improving your credit score:
1. Access a free credit report (African Bank offers this to its customers) and make sure the information is correct.
2. Pay your accounts on time. The easiest way is to set up automated bank payments.
3. Track your monthly expenses with a budget and save for emergencies instead of having to take out another loan to pay unexpected expenses.
“By improving your credit score you improve your overall finances, which is a positive when it comes to applying for a loan and having peace of mind that you are ready for this financial commitment,” says Kumalo.
“If you secure a home loan, keep your credit record clean so that you are able to apply for credit to make improvements to your home to up its value.”
Here again Kumalo cautions when it comes to value.
“It is really key to make sure you know how much you need to make the right improvements and then ensure you get sufficient credit.”
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, agrees that when buying a home you must ensure the property has the potential to be an asset that grows in value over time.
Consider the location, which is a key element in the home’s potential for growth in value, and pay attention to the price of other homes in the area, as well as future development plans in the area.
Goslett says when looking at adding value to your home, some features tend to be more popular than others. Knowing what these features are can help sellers add immense value onto their homes. He says in an effort to find out exactly what buyers really wanted in their dream home they conducted a snap survey.
The results revealed that 87% of respondents preferred a house over an apartment, 90% of respondents preferred neutral colours over bright colours, 72% chose having a pool over having a hot tub, 66% chose a shower over a bathtub, 69% would prefer having a patio over having a balcony, and 68% preferred having a fireplace rather than having heated floors.
Kumalo says this is valuable information. It all comes down to doing your homework. ‘Speak to the area experts and real estate professionals who know what buyers are looking for in the homes within that area or what features are best to spend money on and then do your financial homework to see which financial institution can offer you the most competitive deal.
“Always compare interest rates and scrutinise the payment terms of the loan. Careful consideration of your personal financial situation and doing your homework are the keys to unlocking financial peace of mind.”