If you’re a first-time buyer wondering if you can purchase property on a single income, you’ve come to the right place. It’s a common myth that buying a property on a single income is impossible however we beg to differ with that statement! Although two incomes are always better than one, it doesn’t mean it’s impossible. There are several things to take into consideration and a lot of pre-planning with a far sight. Infact, Buying a home is one of the great achievements in itself for any individual and if that house is purchased with a single income then the achievement is worth a hundred applauds.
IS IT POSSIBLE TO PURCHASE PROPERTY ON A SINGLE INCOME?
Two incomes are always better than one, as far as a bank is concerned. It’s not always going to work out that way though. There are so many families that either have one income or singles who want to purchase a house on their own. Yet, there are a few extra things that you need to think about if you are purchasing your home on a single income, but rest assured that it has been done thousands of times before, so yes, it can be done!
HERE’S WHAT YOU NEED TO KNOW:
ONLY BORROW WHAT YOU CAN COMFORTABLY PAYBACK
The first step is to ensure you know what you can afford, while taking into account that prime lending rate can fluctuate going forward. Evaluating your income and creating a realistic budget is vital when you take this big step.
The undeniable truth is buying property on a single income is pretty tricky but It is not impossible. Although the process seems daunting, According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, over 40 000 single females and over 35 000 single males have already purchased property across South Africa with a single income.
However, there are minimum requirements that have to be met in order to purchase property on a single income.
Buyers need to be earning a minimum of around R15 000 per month after tax, which will allow them to afford a home loan of around R500 000. Single buyers should also calculate hidden costs to avoid being surprised by the “hidden costs” of owning a home, which includes property taxes, insurance, utilities, maintenance and potential renovations in the long run. Read more here: https://www.privateproperty.co.za/advice/news/articles/advice-for-buying-a-property-on-a-single-income/7639
IF YOU ARE LOOKING TO BUY PROPERTY, ONE OF THE QUESTIONS YOU ARE ASKING YOURSELF IS: WHAT HOME LOAN AMOUNT WILL I QUALIFY FOR?
We know that buying your first home is one of the most momentous milestones in your life. But, as exciting as the prospect of becoming a homeowner is, there are a lot of things to consider.
On a good note, SA Property Investors Network is proudly sponsored by Absa. Periodically Absa Home Loans have been assisting first time home buyers to get a bond in place to finance their dream home, while guiding them every step of the way. You can actually calculate exactly how much your bond will cost you by using Absa’s Bond Calculator, which you can access by CLICKING HERE. Absa has also recently launched a new product that is bringing to light on how consumers can utilize instalment sale agreements and how Absa Home Loan can be involved to finance your properties. You can contact Absa Home Loans directly by filling out the form at https://joinsapin.com/connect
LEARN ABOUT ALL THE STEPS AND STAGES INVOLVED IN BUYING YOUR FIRST HOME.
Knowledge is key, therefore you would need to be open to learn so that you can make informed decisions. There are plenty of opportunities along the way for making mistakes, often with costly consequences. Without getting to know the ins and outs of the lengthy and potentially confusing journey ahead, you can easily make one, or many, of the common mistakes. Therefore we are thrilled to introduce you to The Property Academy, a sister company to SA Property Investors Network that focuses more on the educational element of property investment. Learn how to run the numbers, spot good deals and so much more by registering for an upcoming webinar at https://thepropertyacademy.co.za/free-webinars/
SAVE UP FOR A DEPOSIT.
Though banks are becoming more and more open to granting 100% home loans, it’s advisable to have at least a 10% deposit saved up, along with enough money to cover all the other costs associated with buying a home (including transfer duty, attorney fees, home insurance and the first few months bond payment). Paying a deposit will also secure you a better interest rate and lower your monthly repayments, which comes in handy when you only have one income to pay the monthly expenses.
REDUCE YOUR CREDIT CARD LIMIT
Having only one income to rely on can stretch you financially, therefore we would always advise you to go over your finances before considering a purchase. You’ll also want to improve your credit rating before buying. Even if your credit card has never been used, the credit limit will go against your application for a loan. You may be keeping a R2000 limit on your credit card ‘just in case’, but the bank will assess you as though you are R2000 in debt. You can find out more about you credit rating by contacting one of our #finance #powerpartners at https://joinsapin.com/connect
This is where most people underestimate their true cost until they draw up a proper budget and expense forecast.
We can split the expenses into three broad categories:
- Credit expenses are your monthly instalments paid from debt obligations you already have like your car payment or monthly credit card repayments.
- Living expenses can be categorised as essential expenses. These include transport, food, education, water, electricity and maintenance.
- Other expenses are for things like prepaid airtime, insurance premium and satellite DStv.
Based on these rates the bank will determine your monthly repayments over the term of the loan. This will form part of the expense side in the affordability calculation.
HAVE AN ADDITIONAL INCOME PLAN.
We believe that having a plan B is essential. If you lose your job or the economy wilts, having a 2 bedroom house enables you to rent out the second room for additional income. This will assist greatly with monthly expenses and offers you the chance to have your tenant help pay off your bond. On the other hand, if you get married or your partner moves in, you have enough space for the next step in building your family or using this room as an office.
FINALLY: All the glitters are not always gold and while that fuzzy feeling of excitement when buying your first home is natural, you need to be realistic! Set yourself up for success by doing your homework and get the right education in place to feel empowered before you set out on finding your first home.
Get started today to ensure that you get to live the life you love. Find out more about our upcoming educational events at https://sapropertynetwork.com/education/ to take your first step towards greatness.