By Bank Windhoek's Market Research Analyst, Loide David.
Attempting to purchase a house without a plan in place can
be a challenging situation. As a first-time homebuyer, you will need to prepare
in advance. The steps below can help you buy a home more conveniently and reach
the best outcome possible.
Preparation: Before you start with the application process,
you need to understand how banks assess the application; the required
documents, and, most importantly, the costs involved in the entire process. For
instance, besides the property's actual price, there are other costs,
such as transfer duties and conveyancing fees, which you will need to keep in
mind. Ask your estate agent or branch what these are likely to be.
Keep your bank accounts healthy: In the time leading up to
your home loan application, make sure that your bank accounts are healthy and portray
the right image to your mortgage lender. This means that you should not have
late payments, unpaid debit orders, or overdrawn accounts throughout the
application and purchasing process.
Pay your bills on time, and do not commit to any other financial
obligations until your home loan application is successful.
Banks will require at least six months' bank statements to gain
a full picture of your finances. If you are self-employed, the bank will need
your additional financial information, for instance, a cash flow statement in
addition to your balance sheet, and income statement. Having these documents
ready will speed up the processing of your loan application.
Monthly commitment limit: Work out your budget and how much
you can afford to pay in home loan repayments every month. Be realistic with
your budget. A Mortgage Calculator, available on Bank Windhoek’s website, is an
excellent tool for understanding how much you can afford. It is user-friendly
and shows you what your monthly mortgage payment would be, taking into account different
house prices and interest rate scenarios. The interest rate is one of the main contributors
in determining the cost of your home loan. It is useful to know which way they
are heading and the best time to buy your house.
Get a Pre-approval: This is a document from the bank that
indicates how much they are prepared to lend you and the price range of the
homes you can afford. A pre-approval is so important that often property sellers
and estate agents will not consider your offer on a property without it. To get
a pre-approval document, the bank will need your payslip, Home Owner’s Scheme
for staff member’s (HOSSM), or a subsidy letter from your employers, six
months' bank statements, and proof of residential address (municipality bill)
or lease agreement if you are renting (Rental Contract).
Time to shop around: Understand the financial options that
banks have available, like the Bank Windhoek Extended-term Home Loan, which gives
you 30 years – or 360 months to pay back the loan. This extended period means a
lower monthly mortgage instalment, especially for the entry level buyer. After
a few years and as your financial standing improves, the bond can be paid off
well within the 360 month period. Every homebuyer has its unique financial
position, and it is essential to understand which term suits your needs best.
Best time to buy: With the current low interest rates and
Bank Windhoek’s Extended-term Home Loan, this is the opportune time to become a
homeowner. Compared to renting, homeownership is more beneficial in the long
run, since renting does not grant you control over the property. Other benefits
Paying your mortgage monthly allows you to build on equity, which
adds value to your personal wealth.
You can rent part of your home to generate additional income
and allows you to access your employer’s housing benefits, like a subsidy.
Your house can stand in as security when you refinance to
fulfil other obligations.
The house safeguards your financial future through repaying
the loan before retirement.
To make the application process a seamless and stress-free
experience, cooperate with the bank as much as possible. Be honest about your
financial standing and provide any information they require from you.
As you shop around for property, look for the best deals, enquire
about the valuation of the property you are interested in as the bank will only
finance a house based on its valuation amount. You can do this with help from
an estate agent or visit the Bank Windhoek Property Finance Division for