Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, explains that buying a home when interest rates are high will present more opportunities to secure a well-priced home. “When interest rates are high, there tends to be far less competition among buyers. This means that sellers are more likely to accept offers below asking price, especially if there is no interest from other qualified buyers” he notes.

The challenge is to make sure you can afford the purchase. To figure out how best to do this, here are few tips on how to buy when interest rates are high:

Save for a larger deposit

When interest rates are high, you are likely to qualify for a lower amount in home finance, which means that you will have to save up some cash to make up the difference. This can be challenging, but there are ways to build up capital quickly. For example, if you own two cars within the family, consider selling one and use the cash towards the home. Not only will paying a more sizable deposit help with affordability, but a larger deposit will also help reduce the overall loan amount, which will lower your monthly instalments.

Shop around for the best rate

Most financial institutions are willing to offer a rate below Prime to those with a good credit score. This becomes even more important when interest rates are high. To make sure you find the lowest possible interest rate on your home loan, shop around and compare quotes from various banks.

Salvage your credit score

If your credit score is low, take a few months to improve it before you start house hunting. If you have other high-interest debts, prioritize paying them down to improve your overall financial health. Be sure to make all credit payments in full and on time every month, as failing to do so will count against you.

As a final word of advice, Goslett reminds buyers that interest rates fluctuate over time. “This means that interest rates may still go up a bit, but they may also come down. It is important to know what you can truly afford. The rule of thumb is that your home loan should never amount to more than around 30% of your gross monthly income. Once you have worked out that amount, speak to your local RE/MAX agent to start searching for homes within that price range,” he concludes. 

In an article published on 6 December 2020, Steve van Wyk from Seeff Centurion, said it is quite easy to get side-tracked by financing and transferring issues when buying a property and there, he says it is essential to address the factors below long before the actual buying process starts - and ensure no surprises await you once the transaction has gone through.

These are the questions first-time buyers must ask estate agents:

1. Ask the agent for a CMA (Comparative Market Analysis) of the property and ask the agent to explain how the value of the property was determined.

2. Ask the agent about patent defects. Did the seller disclose everything? Make sure that everything is specified in the sales agreement.

3. Ask whether the plans of the property are approved and if there is an undertaking by the seller to provide these plans.

4. Ask if there are any hidden costs, such as the replacement of equipment in the property which is not included in the sale.

5. Ask what exactly is included and not included in the sale and if anything has to be removed and replaced by the seller, and ask for that to be stipulated in the sales agreement.

In an article published on 11 May 2023, Pam Naidu, Director of Sales and Marketing at Devmco Realty, shared some key learnings which every first-time buyer should know when deciding to purchase their dream home.

1. Location, location, location! Also known as the Three L’s:

There are three micro locations that define the actual location of a property on a macro level. If the property you want to purchase is in an estate for example, you may want to find out what area of the estate it sits in and what that actual area provides, such as a good sea views, etc.

2. Financial stability is important:

Get your credit card payments and debts in order.

3. Budget:

Establish a realistic budget to determine your affordability. Create a budget and try to stick to it so that you can enjoy the process and not put yourself under too much pressure.

4. Find a trustworthy real estate agent:

This is the person that will assist in picking out your potential home and exploring your new neighborhood and is also responsible for scheduling tours and negotiating important contracts on your behalf. Ensure that this is someone you trust, to have your best interests at heart.

5. Get approved:

Get a pre-approval letter before you start shopping! This will help you have realistic expectations on what you can afford.

6. Be mindful of transfer and closing costs:

First time buyers usually tend not to factor these costs in, and it comes as a huge surprise at the end. Doing your homework is a very vital part of house hunting.