Before you take the leap and submit an offer to purchase the property of your dreams, it’s crucial to understand that this act constitutes a legally binding contract. Exiting this contract can lead to substantial financial penalties.
Purchasing a property is a long-term commitment, and it’s imperative to make an informed decision before initiating the offer process. Keep in mind that you can only submit one offer at a time, and once it’s in, it becomes legally binding, unless it expires due to your inability to meet specific suspensive conditions.
Here are some essential considerations:
Financial Readiness: Ensure that you can afford the purchase price. If you require a home loan to finance the property, undergo a formal prequalification to determine your borrowing capacity and secure a home loan.
Available Deposit: Have cash on hand to provide a deposit. Typically, banks will grant a home loan covering a portion of the purchase price and you’ll need to contribute a deposit, which currently averages around 10%.
Transaction Costs: Be prepared for transaction costs, which can be substantial. These costs include transfer duty, attorney fees, bond registration expenses, and other incidentals. Ensure you have the required funds available upfront, typically payable once the conveyancing attorneys initiate the transfer process.
Documentation: Gather all necessary documents, including certified copies of personal documents like your ID, proof of address, and marriage certificate. For a home loan application, you’ll also need to provide proof of employment, income, and three months of recent bank statements.
Future Needs: Assess whether the property meets your future needs. If you plan to make alterations or additions, consider any community scheme regulations. Evaluate factors like visitor parking, yard usage, or balcony modifications.
Thorough Inspection: Conduct a comprehensive walkthrough and inspection. Ensure you genuinely want to buy the property because an offer to purchase is a legally binding agreement. Familiarise yourself with the neighbourhood, amenities, schools and daily commute.
Owning a home is often seen as a significant milestone and a wise long-term investment. With economic uncertainties, high interest rates and fluctuations, individuals should carefully evaluate their financial situation and long-term goals before deciding whether to become homeowners or continue renting.
Advantages of Ownership:
- Building Equity: Homeownership allows you to build equity over time, turning your property into a valuable asset and potential source of wealth.
- Stability and Freedom: Owning a home provides stability and the freedom to personalise and modify your living space to suit your preferences without concerns about lease expirations or rent increases.
- Tax Benefits: Homeownership can offer tax advantages, such as deductions for mortgage interest and property taxes, which can help reduce your overall tax liability.
We suggest that you speak to a conveyancing professional at ESI Attorneys who can look over your offer to purchase before you sign it and ensure that you are covered for these eventualities. Contact us today on 021 943-5111.