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Here’s a more detailed breakdown of how to transition from tenant to homeowner in South Africa, with practical advice, tools, and options specifically designed for the South African housing market.
π§ 1. Assess Your Financial Position
✅ Check Your Credit Score
Your credit score affects your ability to get a home loan and what interest rate you’ll be charged. You can check your score for free with:
- TransUnion: www.transunion.co.za
- Experian: www.experian.co.za
- ClearScore: www.clearscore.com/za
A score above 600 is generally considered good, but above 700 improves your chances of approval with better terms.
π° 2. Budgeting and Saving
π§Ύ Know What You Can Afford
Use a home loan calculator to estimate:
- The bond you can afford based on your income.
- Monthly repayments at different interest rates.
π Use tools like:
π¦ Costs to Save For
- Deposit: 0–20% of property price (some banks offer 100% bonds to first-time buyers).
- Transfer duty:
- R0 on homes under R1.1 million.
- Scales upward beyond R1.1 million.
- Attorney fees: Legal and registration costs.
- Bond registration fees: Paid to the bond attorney.
- Monthly costs post-purchase: Rates, levies, insurance, maintenance.
π§Ύ 3. Get Prequalified for a Bond (Home Loan)
Before looking at properties, get prequalified to:
- Know your budget.
- Improve your negotiating power with sellers.
You can do this via:
- A mortgage originator like Ooba, BetterBond, or Banks directly (e.g., Absa, FNB, Nedbank, Standard Bank).
- They’ll review your salary, expenses, credit score, and current debts.
π‘ 4. House-Hunting Tips
π Where to Search
- Property24
- Private Property
- MyProperty
- Use location filters, school proximity, and crime stats.
πΊ️ What to Consider
- Safe and stable areas.
- Access to public transport.
- School zones (affects value).
- Freehold vs Sectional Title:
- Freehold = full ownership, more responsibility.
- Sectional Title = apartments/complexes, levies apply but shared maintenance.
π 5. Make an Offer to Purchase (OTP)
When you find a home:
- Sign an Offer to Purchase – a legally binding agreement with the seller.
- Include conditions such as:
- Subject to bond approval.
- Subject to sale of your current property (if applicable).
A real estate agent or conveyancer can help ensure the OTP protects your interests.
π¦ 6. Home Loan Application
After signing the OTP:
- Submit it to the bank or bond originator for formal bond application.
- They’ll request:
- Latest payslips.
- Bank statements (3–6 months).
- Proof of residence.
- ID copy.
If approved:
- You’ll receive a Loan Approval in Principle or formal bond grant.
- Choose the best offer from multiple banks (use a bond originator for this).
π️ 7. Legal & Transfer Process
There are three attorneys typically involved:
- Transferring attorney – Registers the property in your name.
- Bond attorney – Registers the bond with the Deeds Office.
- Cancellation attorney – Cancels the seller’s existing bond.
Timeline:
- Takes 6–12 weeks depending on the bank and Deeds Office.
πΈ 8. Final Payments & Registration
Before the property is registered:
- You must pay:
- Transfer duty (if applicable)
- Attorney fees
- Bond registration fees
- After registration, you receive:
- Title deed in your name.
- Monthly bond repayment begins.
π 9. Government Assistance: FLISP Subsidy
✅ What is FLISP?
Finance Linked Individual Subsidy Programme: Helps first-time homebuyers earning between R3,501 – R22,000/month.
How it works:
- You apply after getting bond approval.
- You can receive a once-off subsidy from R30,000 to R130,000 (depending on income).
- Can be used to reduce bond amount or cover costs.
Apply through:
- NHFC website
- Or via your bank/bond originator.
π Summary Checklist: From Tenant to Owner
| Step | Action |
|---|---|
| 1 | Check credit score |
| 2 | Save for deposit & fees |
| 3 | Get prequalified |
| 4 | Search for property |
| 5 | Sign OTP |
| 6 | Apply for bond |
| 7 | Complete legal transfer |
| 8 | Move in! π |
| 9 | Apply for FLISP (if eligible) |
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