Last Updated on December 27, 2023 by Elidge Staff
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Guide to Buying a Home with an FNB Home Loan
Buying a home with an FNB Home loan is a major life decision, and choosing the right one requires careful consideration of various factors. For those considering an FNB Home Loan, there are important steps and financial aspects to be aware of. In this comprehensive guide, we will walk you through the process, including understanding a budget, selecting a property, the offer to purchase, financial requirements, additional home loan bond costs, and more.
Understanding Your Budget When Buying a Home with an FNB Home Loan
Before diving into buying a home with an FNB Home loan, it’s crucial to have a clear understanding of your budget:
- Consider additional costs beyond the purchase price, such as transfer fees, bond registration costs, and legal fees.
- Familiarize yourself with the FNB Home Loan and how it works, as well as the FNB upfront bond that indicates pre-qualification for the loan.
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Choosing an Area to Live In
When it comes to selecting the right area to live in, several factors should be taken into account, including:
Area Preference
- Consider the suburb’s appeal, architecture, age of the buildings, safety, and proximity to essential amenities and public spaces.
Distance from Workplace, Schools, Amenities, Shops, etc.
- Evaluate the convenience of the location in terms of commuting to work and accessing schools, shops, and other amenities.
Transport Facilities
- Assess the availability and accessibility of public transportation in the area.
Level of Services
- Examine the quality of municipal services, including infrastructure maintenance, public spaces development, and monthly municipal charges.
Offer to Purchase (Buying a Home with an FNB Home Loan)
Once you have identified a property you are interested in, you will need to enter into an “Offer to Purchase” agreement with the seller or estate agent. It’s important to note that once this offer is made, changing your mind and seeking another property may not be allowed.
Financial Requirements When Buying a Home with an FNB Home Loan
The bank will assess various financial criteria to determine your eligibility for a home loan, including:
- Monthly income and expenditure
- Period of employment
- Payment history
- Potential judgments against you
Deposits, Subsidies, and Collateral When Buying a Home with an FNB Home Loan
To secure an FNB Home Loan, you may need to consider:
- Making a deposit, which serves as a demonstration of commitment to the purchase.
Note: Do not pay deposits to estate agents, sales agents, builders or developers. The Bank will notify you when to pay the deposit to an attorney once you have applied for a Home Loan. If the valuation of the property you want to buy should be higher than what you qualify for on your FNB Upfront Bond, you will be required to pay a deposit. - Taking advantage of potential subsidies for government employees. Government subsidies are available to Government employees and are calculated according to their salary scale at the interest rate they qualify for. The government will pay the bigger part of the monthly instalment, and the employee will have to pay the balance. Remember that the monthly subsidy is subject to fringe benefit tax.
- Providing collateral or additional security if the loan amount exceeds the property’s value.
Can you pay a bigger deposit when Buying a Home with an FNB Home Loan?
Should your answer be yes, this will be to your benefit. You will save yourself a lot of money as you will be required to borrow less money from the Bank, e.g. if the price of the house is N$50,000 and you have a N$15,000 deposit, you will only have to borrow N$35,000 from the Bank. Remember, you only pay interest on the amount you borrow.
Additional Home Loan Bond Costs
In addition to the purchase price, there are several one-time costs associated with obtaining a home loan, including:
Other Bank Costs When Buying a Home with an FNB Home Loan
- Initiation Fee: Charged for setting up and processing the home loan.
- Valuation Fee: Covers property assessment to determine its suitability as security.
- Administration Fee: A minimal monthly fee for the maintenance and administration of the home loan account. Home Loans of N$100,000 and less are exempted from the monthly administration fee
Legal Fees When Buying a Home with an FNB Home Loan
- Transfer Fees: Payable to the lawyer facilitating the property transfer.
- Bond Registration Costs: Fees associated with registering a mortgage bond. The registration fee is also paid to the lawyer
- VAT/Transfer Duty: Tax paid upon the registration of land ownership transfer. Transfer duty is tax paid to the Receiver of Revenue whenever a transfer of land ownership is registered.
It’s important to carefully consider these additional costs and plan for them in your budget.
Conclusion
By following the steps and considering the factors outlined in this guide, you can navigate the process of buying a home with an FNB Home Loan more confidently. Understanding your financial requirements, evaluating property options, and being prepared for the associated costs will help you make informed decisions and move closer to achieving your dream of homeownership.
Frequently Asked Questions (FAQs) about Buying a Home with an FNB Home Loan
Q: What factors should I consider when choosing an area to live in?
A: When choosing an area to live in, consider factors such as the appeal of the suburb, architecture, safety, proximity to essential amenities, public transportation accessibility, and the quality of municipal services.
Q: What financial criteria will the bank assess when I apply for a home loan?
A: The bank will assess your monthly income and expenditure, period of employment, payment history, and potential judgments against you to determine your eligibility for a home loan.
Q: What additional costs should I consider when obtaining a home loan with FNB?
A: In addition to the purchase price, consider one-time costs such as initiation fees, valuation fees, administration fees, transfer fees, bond registration costs, and VAT/transfer duty. It’s crucial to plan for these costs in your budget.
Q: Can I pay a bigger deposit when buying a home with an FNB Home Loan?
A: Yes, paying a bigger deposit can be beneficial as it reduces the amount you need to borrow from the bank. This means you’ll save on interest payments, ultimately costing you less in the long run.
Q: What is an “Offer to Purchase” and why is it important?
A: An “Offer to Purchase” is an agreement entered into with the seller or estate agent once you’ve identified a property you’re interested in. It’s important to note that once this offer is made, changing your mind and seeking another property may not be allowed.
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