Do NOT go house hunting after using an online bond affordability calculator
So you want to go house hunting this weekend? Not sure how much you can afford to buy for? A quick Google search will land you on any one of the many online bond affordability calculators on the banks’, portals and bond originators’ websites.
So you follow the prompts and punch in the numbers as they relate to your income and expenses, and you click “Submit”.
Congratulations! You qualify for a loan amount of R1,2m.
So the first thing you do is enter the suburbs you’d like to lay roots in with the minimum number of bedrooms, bathrooms, a garage and filter by price from R800,000 to R1,2m.
You spot a few you like and contact the agent. A viewing is arranged or you get access to the show day and fall in love with the home upon entering it. You’re sold!
Next, you put in an offer, wait a few days and get word from your agent that the seller has accepted your offer.
You submit all your income and expenditure documents to the bond originator and wait for the bank to grant you funding.
You re-read the word and ask “why”, only to learn so late in the process that your affordability is not R1,2m, but R700,000 instead!
“Those online calculators are wrong 30% of the time,” says Daniel Esterhuyse from Home of My Own, a company which specialises in getting prospective homeowners buyer-ready. “The reason these calculators are wrong and by such a big margin is because people lie, or don’t really know, how much their real expenses are, and they do not consider that the tenants’ current rental payments should actually be included in their disposable income.”
Daniel’s company works with buyers at the very beginning of their homeownership journey, from conducting a full affordability assessment, credit check, credit record repair, house hunting according to the buyer’s unique specifications, negotiating with estate agents and sellers, doing bond origination and submitting to the banks.
“We charge a fee of 1.5%, or a minimum of R10,000,” he says, noting that the bulk of his clients fall within the affordable housing segment and either do not have the time nor the access to trawl online portals, contact agents and visit available properties. “One of our current clients is a single mother who works three jobs; she has three of her own children as well as looking after her sister’s child. Another of our clients is a driver for the SA Blood Service and he is only available to take calls at 1pm and after 6pm. We can therefore source and negotiate the best deal on the most suitable available property on their behalf.”
Esterhuyse says his company is on the side of buyers, specifically in the affordable market, noting that few companies look after the interests of buyers.
“We are not aligned to any single estate agency, developer or bank and can therefore source the best home for the buyer – one that meets all their criteria,” he tells us, noting that buyers need to understand that looking after their credit records is critical. “There is no single quick fix to repairing a poor credit record: Pay your debts on time and in full, or make arrangements with your credit providers to pay them off. You do not need to pay a debt specialist to ‘fix’ your record. Take ownership of your debt and pay it off.”
Prospective buyers owe it to themselves to have a proper financial health assessment done by a reputable company to be sure of what it is they can afford to buy for or a price that will give them the best chance of bond approval by a bank. Buyers, it’s time to ditch the online bond affordability calculator as your only financial health barometer.