It took Lindiwe Buthelezi, an executive personal assistant at one of Joburg’s private hospitals, at least five years to save money, improve her credit record and to buy a house that best suits her family’s needs and her financial commitments.
“Buying a house is not child’s play. It can be stressful and very intimidating if you go into it unprepared. After all, it’s a long-term commitment that shouldn’t be taken lightly,” said Buthelezi, reflecting on her journey to becoming a first-time home owner, which she accomplished in January.
Just a few years ago, Buthelezi, a single mother of two boys was struggling to make ends meet with her R21,000 salary as a hospital receptionist.
School fees and rising fuel, electricity and food prices overwhelmed Buthelezi.
“It was so bad that my salary would barely stay in my bank account for five days. My credit record was still in good standing, so I fell into the trap of living off bank loans just to make it to the end of the month.
“Because our banks are lending recklessly, I could still apply for credit cards despite my accumulative debt from bank loans. The credit cards closed the gap but I could tell I was on a bad financial rollercoaster when my debt reached R60,000,” said Buthelezi.
A reprieve came five years ago when her manager encouraged her to apply for the executive personal assistant post that would increase her take-home salary by at least R8,000.
When she got the job, her first objective was to get rid of the debt hanging over her head, a mission that took her just over a year to accomplish. Once that was done her next move was to start saving.
“Saving was a big thing because once my finances stabilised I started making plans, including buying a house for my family.
“I put my excess money away and started rebuilding my credit record while window shopping on property websites for the kind of house that would best suit us, [calculating] how much I’d be expected to pay on my bond and also the property levies, etc. I just wanted to see what I’d be comfortable with,” said Buthelezi.
She spotted a couple of properties she liked in Randburg, Johannesburg, and with her credit record back in a strong position, Buthelezi started shopping around for a financial institution that would give her the best rates for a bond.
“I qualified for a R1.1m pre-approved bank loan. I took this around for negotiation purposes with prospective sellers. My budget was R800,000 and I had also saved enough money to pay for transfer fees,” said Buthelezi.
Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, recommends that new home buyers should take their time when looking for property as it is very complex, with many factors to consider before signing on the dotted line.
“The mistake many buyers make is that they fail to shop around and tend to simply apply for a loan through their chosen bank. But if they had taken the time to inquire at a few banks, they might have been able to negotiate a better deal with a lower interest rate.
“The savings might seem nominal when you are weighing up prime plus 1% v prime plus 1.25%, for example, but those 25 basis points can end up saving you hundreds of thousands of rand in interest charges over the span of your 20-year home loan, so it is well worth taking the time to shop around. Using a bond origination service such as BetterBond can simplify this process for you, which will save you time and money in the long run,” said Goslett.
BetterBond is an online tool that assists buyers to calculate what they can afford, and helps them to apply for a bond at various financial institutions for better rates, among other things.
Buthelezi settled for a two-bedroom property with monthly bond repayments of R9,000, including levies.
“I think had I rushed the process I would have squandered [my money]. I’d advise first-time buyers to first be realistic when they look at their financials and secondly to take their time and look at as many options as possible before committing themselves,” said Buthelezi.
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