How to save to the max when buying a home

The experience of buying a new home can be quite daunting, but if prospective buyers approach it smartly, it could be both exciting and financially rewarding. Knowing exactly what to do, what to look out for and which pitfalls to avoid could see a healthy amount of cash back in your pocket.

There may be a lot of paperwork, logistics and a fair amount of money involved in purchasing and insuring your home, but it’s absolutely worth it, especially if you do your homework and act wisely,” says Susan Steward, spokesperson for Budget Insurance. A buck saved here and a few bucks there could eventually add up to a healthy amount and pay for some extra upgrades, finishing touches or a proper housewarming, help you to settle some debt, save up a bit of money for unforeseen circumstances or, who knows, maybe even a getaway.

Make sure you’re financially ready:

• Take time to save up: Prepare early for buying a home, giving you enough time to save up for a good deposit, the costs involved in the purchase process and renovations. A good deposit could save you thousands over the life of your home loan. Also bear in mind that, in addition to the purchase price, you’ll need to budget for transfer duty, attorney transfer and bond registration fees, as well as initiation fees.
• Check the insurance tick box: Make sure that you can afford insurance on the property – covering the bond, buildings insurance, home contents insurance and personal liability insurance.
• All-clear on debt: Service your debt well and improve your credit score. The better your credit score, the better your risk profile and the higher your chances of getting a competitive interest rate. Make sure that all your accounts are up to date and paid regularly, check your credit score and address any problems before applying for a home loan.

The house hunting process:

• Location, location, location: Consider the suburb you want to live in – staying close to schools, your workplace etc. will save fuel costs in commuting.
• Security check: Living in a house and suburb with excellent security measures in place could result in a lower risk profile and better insurance premiums.
• Compare: Make sure that the same property isn’t listed elsewhere at a more competitive price.
• Negotiate: Negotiate the selling price and don’t be afraid to make a cheeky offer. If you use an agent, make sure that their commission is competitive. The seller pays the agent, but a lower commission could see them being more flexible on the selling price.
• Off-plan: Buy a home off-plan in a development and you won’t pay transfer fees.
• Below a bar: Homes below R1 million are exempt from transfer duty, which saves you a significant amount of money.

Once you’ve found the home you want:

• Home loan shopping: Shop around and compare to make sure you’re getting the best deal with the lowest charges and best interest rates. Don’t simply go to your transactional bank and assume that they’ll give you the best value for money.
• Invest in an inspection: The valuation done by the mortgage provider only checks that your offer on the property is a fair value. Consider getting an independent inspection done on the property to check there are no faults that you have not seen, e.g. subsidence, rising damp, roof problems and retaining wall stability.
• Debt check: Make sure the property you’re buying has no outstanding rates, taxes or utilities as you will not be able to open up a new account until that is paid up.
• One attorney, two boxes ticked: The seller has the right to choose the transferring attorney, but it’s advisable to negotiate with the seller so that the same attorney is used for transfer and registration, allowing you to negotiate a better fee for both services.

Moving into your new home:

• Cut the clutter: You could save a lot of money by having fewer things to move, so get rid of things you don’t need before you move. Removing these items from your insurance policy could also save you a significant amount of cash.
• Repurpose: Decluttering is good, but if there are things from your old home that you can easily repurpose and use in your new one, try to upcycle and reuse them to save.
• Goods in transit: Make sure whether your insurer covers goods in transit and whether this option is also provided by your moving company. This not only protects you against a significant financial outlay should goods need to be replaced, but also helps you not to double up on cover and pay more than you should.
• Maintain to save: Maintaining your home is vital in order to retain its value and avoid expensive repairs. This also results in fewer insurance claims, which could positively impact your risk profile and your premiums, saving you even more.

When you tick all these boxes, you could end up with a couple of hundred rands to thousands back in your pocket, so being smart about home buying makes sense… and cents.

Susan Steward is spokesperson for Budget Insurance.