For a house worth R800 000, a gross monthly income of around R27 000 is required.
Samuel Seeff, chairman of the Seeff Property Group, says there are other costs that buyers need to budget for. Picture: iStock
Owning a home is a major financial milestone, but purchasing one before you are financially prepared can turn a dream into a costly burden.
Samuel Seeff, chairman of the Seeff Property Group, says property prices tend to rise annually, so it is better to buy a house the moment one is financially prepared because the longer the wait, the more you will likely need to pay.
He warns that selling a house takes much longer if the buyer finds themselves in financial difficulties.
Benefits of buying a house
Seeff says buying a house provides a foundation for financial security and personal stability, ensuring that monthly housing expenditures contribute toward a wealth-generating asset rather than paying off a landlord’s property.
“Each monthly repayment helps build equity in your home until the bond is paid up in full. At the same time, market growth can increase its value, giving you a valuable asset.”
He adds that paying extra into the bond can also shorten the repayment period.
“You may eventually sell to move to a larger home or better neighbourhood, using the accumulated equity to reduce the next mortgage. You can also access the equity, but only for financial emergencies, rather than lifestyle expenses.”
Gross monthly income needed to buy a house
Seeff says first-time buyers require financial planning and a healthy credit record, ideally a score of 650 or higher.
“You can establish credit by opening a low-risk account, such as a store card or cell phone contract, and settling the balance fully every month,” he advises.
If one is looking into buying a house for R800 000, Seeff says a gross monthly income of around R27 000 is required. One for R1.2 million would require a gross monthly income of approximately R40 000.
“A permanent job with a three-month track record is typically the minimum requirement, with a higher threshold for self-employed applicants. Buyers can also pool income with a partner and purchase jointly,” he adds.
Seeff says it is important for buyers to budget for upfront transfer costs, which include bond registration, transfer costs, and transfer duty on any portion of the purchase price exceeding the R1.21 million exemption threshold.
More costs
He says buyers must not forget to budget for housing costs such as municipal rates, taxes, sectional title levies, insurance and maintenance.
“While 100% bonds (with costs in some instances) are generally available for first-time buyers, a deposit may also be required, usually for higher price properties.”
Seeff says the buying process begins with “signing an offer to purchase, which becomes a binding deed of sale once accepted by the seller. This document usually includes suspensive conditions, such as securing a home loan.
“Conveyancing attorneys handle the legal transfer, which takes approximately three months, with occupation occurring after registration.
“Throughout this transfer period, buyers must avoid taking on new debt or opening retail accounts, as banks perform a final credit check before registration and can withdraw the loan if your financial profile changes negatively.”
