A beginner's guide to buying your first home in South Africa: Simplifying the process

Most of the articles on buying your first home in South Africa are still too complicated and full of jargon to actually mean anything to most first-time buyers so in this guide we’re going to start from zero and explain the entire home buying journey in the simplest way possible. Let’s get going!

Owning a property in South Africa means that you have legal rights to a piece of land and any buildings or structures on it.

These rights are protected by the law, which ensures that you have the right to use, sell, or rent out the property. It also means that you are responsible for maintaining the property and paying any related taxes or fees.

Here’s an example of what purchasing a property in South Africa would look like

Let's say that Tumi is a young professional who is ready to buy her first home in South Africa. She finds a property that she loves and decides to make an offer to purchase it.

The seller accepts her offer, and they sign a legal contract called an "offer to purchase." This document sets out the terms of the sale, including the purchase price, the conditions of the sale, and the dates when the transaction will take place.

Tumi applies for a home loan from her bank and gets pre-qualified. Her bank assesses her financial situation, including her income, expenses, and credit history. Once approved, Tumi signs a loan agreement with the bank, which specifies the terms of her loan, such as the interest rate, monthly payments, and repayment period.

Tumi also needs to obtain insurance for her new home. She gets a Home Owners Comprehensive (HOC) insurance policy to protect her property against any damage or loss. Additionally, she takes out a life insurance policy to ensure that her home loan will be covered in the event of her death or disability.

Finally, Tumi's property transfer and bond registration are processed through a conveyancing attorney. This legal process involves transferring the property's ownership from the seller to Tumi and registering her home loan with her bank. Once all the paperwork is completed, Tumi's new home is officially hers!

So now that we understand the basics, let’s look at the home-buying process a little more closely.

Step 1: Finding out how much you can afford

The first step in the home-buying process is to figure out what you can afford. You should calculate your budget and the estimated loan repayment costs to ensure that you can afford the property you want to purchase. It’s important to know exactly how much you can afford, so you don’t end up overextending yourself.

Step 2 (optional): Getting pre-qualified

Once you have a good idea of your budget, you could get pre-qualified for a home loan. This will give you a certificate that will help you understand what finance you may qualify for towards the purchase of a property.

It’ll also show sellers that you’re serious about buying and have the financial backing to make it happen. You can do this through your regular bank or make use of the services of an experienced bond originator.

Step 3: Finding your dream home or property

With your budget and pre-qualification in hand, it’s time to start looking for your dream home! You can browse thousands of available homes across South Africa on Private Property, which is a great platform to start your search.

Step 4: Make an offer to the owner

When you find the home you want, you’ll need to make an offer. Before making an offer, do some research on the prices of houses in the area and check out the market conditions.

Speak to an estate agent or property expert for advice, and look at the size, features, and condition of the property to determine whether it will need repairs or extensions. Once you have all the information you need, read the offer to purchase carefully to understand what your rights and obligations are before signing.

Step 5: Get approved for a bond

Applying for a home loan doesn’t have to be hard or complicated. You can apply online or use a bond originator.

The bank will assess your financial details, perform a credit check, validate your documents, and validate the property details. If your application is approved in principle, the bank will make you a loan offer, which is how much your loan could be.

If you accept the loan offer, the bank will do a property valuation to confirm the value of the property, and then make you a final offer. Should you accept the final offer, the bank will instruct the registration attorneys to register your bond.

Step 6: Insurance, yes, it is mandatory

If your property is free-standing, you’ll need to get a Home Owners Comprehensive (HOC) insurance policy before your bond is registered. Life insurance may also be mandatory for your home loan or you may want to protect your family should something happen to you. Check out available home insurance offerings for more information on how the bank can assist you.

Step 7: transfer and bond registration

This is the legal process required to transfer the property into your name and register a bond with your bank. The attorneys will first contact you to sign the necessary documents.

Once you’ve signed all the documents, the attorneys will lodge them at the deeds office. It takes two to three weeks for the documents to be inspected. The whole process (from start to registration) can take up to three months. On registration, the home will be yours!

Step 8: Moving into your new home

Congratulations, you are now a homeowner! It’s time to make your move. Start planning early by confirming and arranging your move-in date and time with the seller or agent.

It’s a good idea to have the previous owner or agent do a complete walk around the property when the keys are handed over to ensure that everything is as it should be and to ask any questions that you may have.