Mortgage

This depends on your income, your pattern of spending, current interest rates, the value of the property, and your existing financial commitments. Lenders will consider your total living expenses and loans costs into the future. Your borrowing capacity is determined as a percentage of your gross income. This can vary, however for most lenders the guideline is 25% of the gross income. In determining your gross income, the lender may include a certain percentage of your partner’s income. The maximum you can borrow is 80 percent of the liquidation value of the property, or, if it is a new home, 100% of the total building costs. The liquidation value is the amount the property is estimated to be worth if sold at auction. For an existing home the liquidation value is always lower than the purchase price. Therefore, the lender will ask how much you can contribute yourself to the cost of purchase. A home loan consultant can work out the options for you.

In principle, when you buy a home you must have enough money saved to cover the cost of moving, furnishing, and, - if necessary- renovating or upgrading the property. The total cost of this could add up to 10 per cent of the price of the property. This is why we always recommend you should have some money set aside as a financial reserve. But it also means you may have to borrow the whole amount to buy the property. However, you should never borrow more than you can handle on the basis of your income and regular outgoings. If you choose a life insurance linked mortgage, it may be a good idea to use some of your savings to deposit an extra premium into the life insurance policy linked to your mortgage.

Your home loan plus your savings from your available funds. The price of the property must be less than this, because there are additional expenses to cover when you buy a home (usually around 10% of the purchase price of an existing property). If you divide the total figure of your available funds by 1.1 you will have an indication of your buying power.

Many home loan consultants will only look at the net figure of your home loan commitments. But, as a homeowner, you will need to account for other costs as well, like property maintenance costs and insurance premiums. It’s wise not to decide anything until you have a full view of all the costs involved in buying and owning a property.

You yourself decide from which lender you wish to request an offer. You can choose to talk to a lender directly or go through a home loan consultant. The latter has the advantage that you will have different lenders to choose from.

When buying a home, there are incidental (once only) costs to be paid in addition to the purchase price of the property. These once-only costs are divided into purchase costs and funding costs. Funding costs are deductible from income tax, but purchase costs are not. Purchase costs include the fee charged by the real estate broker who has assisted you with the purchase of the property, and the fees charged by the notary transferring the property to your name (transfer of title).
The costs associated with funding the purchase of your home includes a handling fee which most lenders charge for setting up a home loan, the fee charged by the notary for drafting and registering the mortgage deed, and the fee charged by the surveyor who appraises the value of your new home. 
 

When, after all, you have found the property and the home loan of your choice, you will want to protect your new home from unforeseen events. Effective security measures, backed up by a well balanced insurance mix ensure that any financial consequences of an unforeseen event can be contained. When you have bought a property it is a good time to realign your most important insurance policies to the new situation.

A mortgage is a commitment you take on for a long term, but of course many things could happen along the way. To make sure that your ability to meet your home loan payments will not be seriously affected by any such changes, we have listed some tips below.
If you and your partner are planning a family, there will be important changes in terms of your future income and expenditure. For most families, a family extension means there will be a smaller budget left for home loan commitments. You probably discussed this when you took out your home loan, and you may have opted to include both your incomes in working out your buying power. This can be appealing for as long as there are no children. After all, you can borrow more. But borrowing more also increases your repayment commitments and that may not be in your favor in the long term.
The day when you will retire from work is often known far in advance. When the day has finally arrived, it is likely your income will be less, meaning that a mortgage commitment will form a bigger share of your household budget. Moreover, you will no longer enjoy the full benefit of interest deductions from income tax. It is wise to opt for a loan term that already takes your future income situation into account.