Home buying? Do the numbers

DON'T BE CAUGHT: BE SURE TO FACTOR IN ALL COSTS AND REPAYMENTS WITH INTEREST HIKES

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So, you have saved up for a deposit. You have decided what you want in a home, as well as the area where you would like to live. You think you are ready to buy a home. But not so fast: what about the numbers?

Reinier van Loggerenberg, CEO of Craft Homes, says one gap he sees over and over in South Africa's housing market is understanding.

"People want to buy. They are tired of renting. They saved something.

"But the moment they start looking, jargon and guesswork creep in: 'How much can I really afford?, Why was my pre-approval less than I expected?' and 'Does debt review mean I am shut out forever'?"

He says good customer education is the difference between a stressful journey and a confident one. He has this practical guide for first-time buyers and anyone reentering the market as well.

Affordability: what banks actually look at: Affordability is not just the bond repayment. Lenders assess your total monthly obligation and whether your income can comfortably manage it, Van Loggerenberg says.

You can build your own view the same way:

► Net income: Your take-home pay after tax and deductions;

► Existing debt: Credit cards, personal loans, vehicle finance and store accounts;

► Essential living costs: Food, transport, medical aid and school fees; and

► Property costs: Rates and taxes, levies, home insurance, life cover, utilities and maintenance.

Helpful hints:

► Aim to keep your total debt repayments (including a new bond) below 35-40% of net income.