Windhoek
We’ve all read headlines, such as ‘Namibia has second highest housing price increase’; ‘Property prices continue to increase’ and that the ‘International Monetary Fund fears a house price bust’.
“Because of such headlines, potential homeowners should make 100 percent sure they do their homework and avoid the most common mistakes first-time homebuyers tend to make,” says national sales manager FNB Home Loans Magda Talbot. She goes on to explain that purchasing a house is an exciting – but also complex – process and a number of factors must be taken into consideration before jumping in.
“The first one is affordability, which will often throw a first-time homebuyer off, because it is not a simple calculation. Often first-time buyers are overly optimistic about their [preferred houses’] affordability. Merely taking your income into account is not an accurate assessment of your affordability, as there are expenses that will have to be maintained along with your bond repayments.
“Before starting to look for a home, potential homeowners should get an indication of the loan size they qualify for. First National Bank can assist clients with pre-qualification. Don’t be disappointed if the amount you qualify for is less than you thought. The bank needs to ensure you can comfortably afford a home loan and protect you from getting into financial difficulty later in life.”
“The second thing to keep in mind is the fact, that the bond is not the only expense that comes with owning a house. Once you have successfully bought your house, you will need to be realistic about doing things like furnishing your home. It is not wise to take out credit to furnish your new home.
“You will need to do this gradually, so that you can keep up with your bond repayments and all the additional costs related to your home,” Magda cautions. Other expenses that will need to be considered and budgeted for include municipal rates, taxes, insurance and levies.
She adds that it was also important to note the different types of properties and how they would affect the finances once you are a homeowner.
“For example when you purchase a sectional title you’re buying a unit in a complex, or a development. Sectional titles are considered a more affordable option, because you would pay a fee often referred to as levies that go towards covering your home insurance and the general maintenance of the common property for the whole complex.
“However, this is different for someone who chooses to purchase a freehold property, which is a free-standing or a cluster house, as they would have to maintain their property themselves,” she explains. In addition, there are rules for the sectional titles and it would be wise to know these before purchasing this type of property.
According to Talbot, when someone gets to the stage of buying their first home, practical thinking is sometimes overruled by excitement.
She cautioned: “Rather ensure that your finances and personal circumstances are completely stable. Don’t rule out renting completely, because it has various benefits. You can save up for a deposit to ensure that when a good deal comes along, you will have a very good chance to secure the mortgage and the house that you really want, in an area that you have thoroughly researched.”