 Hi to our audience at home, my name is Monty Mukhomo, Digital Channel Manager for NetBank Home Loans. Good day, I am Bolin Duandwe, Head of Affordable Housing, NetBank Home Loans. Thank you for joining us today as we unpack the home buying journey. We find ourselves under such exciting times where interest rates are at record low levels and naturally potential first-time home buyers want to take advantage of the slow interest rates by buying their first property. We also see a lot of questions and queries from home buyers about how do I go about buying a property, therefore we saw it fit that we have this conversation where we unpack the chain for our future buyers. Happy Monty, let's just get started from the beginning before one even buys. How does one prepare themselves financially for this big step of their life? Absolutely, thank you Kohli. I think one of the most important decisions as buyers that we are likely to make is the decision to purchase a property and that decision sometimes carries with it a lot of emotions, excitement of the prospect of owning this home. But we like to obviously advise our buyers that they have to be financially prepared for the cost of owning a home as well as purchasing a home. So there are many costs that we would like to highlight to our buyers so that they don't think that it's just about the monthly repayment to storement for the bond but there's also other costs that are involved and I'll just give our audience some of those costs. So Kohli you'll be aware that we have things like levies that you need to pay for should you be buying in a sectional title. We also have things like upfront costs particularly for the registration process which can be quite pricey. We also have things like security, should you be staying in a freestanding house, a lot of people want to ensure that everyone at home is secured and we also have things like insurance like home owners cover in the case of a freestanding house and things like life policy assurance which are critical insurances to have if you want to own a property. And Kohli those are just some of the costs that are associated with owning a home and I think would encourage our buyers to do a bit of homework around what are these likely to going to cost me given the price that I'm looking at when I want to own a property. And I think some of the costs involve buying itself. I hear it's such a financially intensive exercise to go through. Absolutely, you're absolutely right Kohli. And I think this we don't want to just leave potential buyers feeling like this is just an expensive exercise. I think one thing that we have to highlight just like you said around the fact that as an economy we found ourselves at record low interest rates for the first time in a very long time in our country. So what that means is that there is a significant amount by way of saving. So Kohli let's look at perhaps the prime lending rate leading up to the lockdown in South Africa and I think there were around 10.5% by way of interest and if you look at a variable of somebody who's buying a house for let's say 1.5 million over a period of 20 years that person would be expecting to pay in the region of 14,900 grand by way of monthly repayments back to the bank. And if you look at the prime lending interest rate that we currently have right now of 7% using the same variables Kohli is that the instalment would be at around 11,400 grand. That is a significant significant amount of money. I mean you're looking at around the difference of 3,300 that's pretty significant Kohli. For me one of the other things that I would like for us to look into apart from the financial cost of course that one has to be prepared when it comes to it's this topic around credit scoring. We often hear people talking about a credit profile, credit bureaus, a credit score and all those things and I would just like to spend a little bit of time unpacking there a little bit and what it entails and what it means for you as a future buyer. So as you go about your day to day activities borrowing money paying it back it's very important that you do those responsibly because you are leaving a footprint at the credit bureau. So what would typically happen before a bank grants you a home loan they will then go on to the credit bureau and hold a record for that particular buyer to get a sense of whether they have the ability and the willingness to pay back the money that they are actually seeking. So we then as banks would look at something called the score which really is a combination of information about what's on your bureau based on your behaviour. So it's very important that we look after our credit profile, guard it with your life really because sometimes your life depends on it and just make sure that you get yourself in a position where a financial institution would be willing to lend money over to you. That's the credit scoring process so over and above making sure that you can afford the property you need to take care of this not at the time when you're ready to buy that particular house itself, however way before you get into the process itself. Sometimes when financial institutions are looking at the credit profile they would go as far back as looking at your behaviour 24 months before the day that you are buying. So it's a way of saying this person is likely to pay me back because they have a history of showing that they can pay back the loans that they've taken with other institutions. You are quite correct. So maybe moving along we can then look into so you've been conducting yourself in a certain way and you are in good order to get a loan, you understand the cost and everything. Is there a way for people to get a sense of what they qualify for? Absolutely. So I'm briefly going to cover what we've created, we call them tools in the home buying journey. And this is as a result of the bank taking a decision to say that the timing in which we establish a relationship with our buyers or potential buyers is rather a bit too late at a point in which they require finance. But that we have to take a step closer to the customer, particularly around the time when they are making those decisions and they are thinking about what is right for me, for this property, for my family and my financially ready for this. So we've created a couple of tools and I'll start with the first one called a pre-approval, where within literally minutes you can get a sense of how much the bank is prepared to lend you by way of a home loan. And what we pretty much look for when it comes to the assessment of a pre-approval is a couple of things, namely your income, as well as your credit conduct, like you've mentioned, hence the importance of ensuring that you keep a clean credit record, as well as affordability in relation to the property that you want to buy. And within literally minutes, like I said, we give you a result that tells you how much the bank is willing to give you, how much deposit might be required from you if required. It's always the issue of the deposit. Right. There's also expected installments, monthly installments that you need to be aware of so that you kind of know how much it might likely be going to be paying for this particular home loan. So totally, that's one of the tools that we currently have. But I'd also like to briefly speak about another tool that we have, which we call property reports. And the importance of property reports, I'll give this example. So if you look at the pre-owned vehicle industry in South Africa, there's a lot of things that we do as buyers by way of research of a particular vehicle. For instance, I might want to know what the mileage on that particular vehicle is, how many people have actually owned that property, and has it been serviced according to the manufacturer standard? So we go to that extent in terms of doing a bit of research when it comes to vehicles. But finally enough, when it comes to buying a property, that's where we find that information is lacking. Hence why we've made this information freely available to our customers. And there's so much useful information in there, I'll just briefly touch on a few. So what you will get in a property report, for example, is what is the estimated value of the property that I'm about to buy? It gives you things like demographics of the age of the people that stay in the area, and how long they hold on to a property for in that particular area. And last but not least, we have things like amenities that tells you key information, like, is there schools around the particular house that I want to live in? Is there police stations, for example? Is there hospitals? So we provide you with that level of useful information so that you have the confidence that when you are buying, that you are sure that you've affected all these decisions. So if I may just quickly jump in, I'm liking this one about amenities, because we always say location, location, location. Absolutely. And really, that has not changed. It's quite important that you get that right, because we talk about a property as an investment and something that has the potential to appreciate in value. So it's important you get the right location. In fact, I'm reminded, those that know this very well would simply say you are better off buying the cheapest house in a good area than buying the most expensive or the best house in the worst location, because you can improve your own house, but you can't improve the area really. So on that note, I think it's important that we talk about this bit a little bit more. As you know, we spend time getting ready for the transaction itself, but we actually don't put due consideration for the property that might be suitable for us. Yes. Our circumstances are different. We're unique human beings. For me, a sectional title might work better, because I like the security that it offers. But for Monty, you might find that a freehold property works a lot better, because one, he doesn't want to pay the lilies, but two, he gets the freedom to do alterations or make changes to his property as he wishes. Yes. For someone else, a building loan might actually be the best alternative, because they already own a piece of land. All they want is to approach a bank and get a loan to actually build the dream property. Absolutely. Whatever those circumstances are and whatever property you choose to go for, it is key that you also look at the location where your property is situated. So Monty has already spoken about the cool things that you get in the property valuation report, and I would really just want to say, look out for the amenities in the area, make sure your chosen area offers the good kind of amenities that offer your property the potential to grow in value. Absolutely, absolutely. And Koli, I think that then would lead us to the next step, which is also just as important, which is now that you've searched for your property, potentially even on property portal somewhere, you've spoken to the estate agent, now is the next critical thing, which is to view the property. And Koli, during these times of social distancing, we are also seeing a growth in virtual viewings of properties, so to obviously make it easier for everybody. But we also always encourage a physical viewing before you sign on the dotted line. And the one reason for this is that during that time, like I said earlier on, the excitement when you're viewing a house and you start picturing yourself and your family living in this house, there's something that we often neglect to do, which is to inspect the property to ensure that there is no immediate damages that will not leave you adverse after taking ownership of the property. Just a few things like inspecting the roof, making sure that the plumbing is sound, the electricity works, ensuring you get the compliance certificate, because you want to ensure that when you take ownership of the house, that it's solid. And maybe something about all these potential defects and damages, it then leads us to the conversation around the actual OTP, which is the offer to purchase. Yes. The offer to purchase really is a legally binding document that is signed by you as a buyer in the seller whereby you are agreeing the terms of the transaction that you are entering into. So for me, one of the key things then is to make sure that in your offer to purchase, if there are certain defects that the seller has undertaken to fix before you take occupation of the house, then you make sure that it is covered in the offer to purchase that way you are protected as a buyer. And if they are there and the seller is not undertaking to fix them, those can still be noted on the OTP as well. But also things like fixtures, those must be detailed in the OTP. Most importantly, majority of us when we buy a property, we actually need to source funding. Therefore, if your purchase is subject to you obtaining a bond from a bank, it's important that it's detailed in the offer to purchase as one of the conditions. And Monty, another condition that often shows up in the OTP is the subject to sale. So I want to buy the property but I already own my one property which I want to sell for me to free up capacity to then buy this one. It's important that these are detailed in your offer to purchase so that you don't find yourself compromised. Should you not be able to sell your existing property or should you not be able to get the funding that you see? Absolutely. So clearly, I mean, I think we can see the importance of having this conversation, giving useful information. This is all leading up to you getting a bond with a bank, right? So can you talk us a bit about the options that you have available as a buyer when it comes to home finance? So as a buyer at NetBank, you really have four ways that you can approach us. We do have a channel called the mortgage origination channel whereby a potential buyer approaches a mortgage originator. They offer the ability to apply at multiple institutions, therefore you have choice. You also have the ability to walk into your nearest branch and speak to someone that you're familiar with, a familiar face, a friendly face, and it might even be a branch that you go to in any case. We also offer a home loan sales consultant that really can take you through the entire process from beginning to end and hold your hand. We don't want this to be an intimidating process for future buyers. Therefore, this home loan sales consultant is even in a position to help you fill in the application form. All of this for your convenience. Our flagship channel really is our digital platform. Today we're having this conversation via virtual platforms. People are viewing us at the comfort of their home. We've gone all things digital, so banks have also moved along with the times as well. So as a future buyer, you are able to complete your application from beginning to end at the comfort of your home, but we also overlay this with the help of a call center person that's able to guide you through should you get lost or should you find yourself needing help halfway through the process. So we reward you for your self-service behavior. If you use our digital platforms, we'll give you 1% cash back. So it's 1% of the loan amount that you are seeking. It's kept at 15,000 rent. This is money paid to you and registration of your bond, and really Monty spoke about the cost earlier, and this is money that can then help you to make bearable some of the costs that we have actually spoken about. It's paid registration, so maybe it's fitting that we then talk about how the registration process works. I know a lot of people would talk about how long it takes to get the property and finally move in, and really a big part of it is never quite the credit approval. It's really just waiting for registration. Yes. Goli, what I really like, I mean that sounds amazing that for the first time in this home buying journey that a customer is getting money back into their hand or a buyer is getting money back into their hand, which is really going to be helpful given the expenses and the cost of owning a property. I think that the registration process just is critical. It's a lot slower than your other products given the fact that it needs to go through proper due diligence and ultimately registration into the new owner's name. It's a big investment. It's a big investment, absolutely. So there are a couple of participants in the registration process. Goli, firstly you have the bond registration attorney who will be assigned by the bank that has approved your bond who will then register the bond on behalf of the buyer as well as the bank. And then Goli, on the other end we have the transferring attorney who will then transfer the property from the seller to the buyer. There's also some admin that's required by the transferring attorney ensuring that rates and taxes are up to date, ensuring that transfer duties are paid to sales, et cetera. And this particular process, I mean just to give an example of how much a buyer can expect to pay. So using the same variables again of a property of about 1.5 million, you are likely going to spend in the region of 80,000 grand making sure that you pay for both attorneys as well as the transfer duties amongst other things as well. So again you can see the value of ensuring that you do your homework prior to you entering into this transaction. And talking about the transfer duties, I think one of the things that first time home buyers need to know is if you purchase a property that costs less than 1 million rents in South Africa, you actually don't pay the transfer duties. You only start paying this from 1 million rents and higher. So I really think the playing field is quite level here. The ground is fertile. There's so many reasons why people would be... Absolutely, absolutely. Just before we close off, I mean that's not the end of it, is it, right? So there's also what happens after I've taken ownership of this property. Is this the end? So it is actually the end. It's the end of the complicated bit and now you're really getting to the exciting stuff. You've moved into your property. We encourage home owners to take good care of their properties to make sure that it grows in value. So just a couple of tips, one thing that you should look out for. Look out for the property leaks, clean gutters, especially before the start of the rents, which means now it's actually around the time. I'll speak to my husband about that. So clean the gutters, but also regularly paint your property, cut the grass. These are all things that enhances the value of your property. But then most importantly, also make sure that you maintain your monthly repayment on time because soon you'll be coming back buying another property. Fantastic, fantastic. So there you have it, to our consumers, to our potential buyers. Wish you all the best and definitely check out netbank.zero.za for home loans for more information about what we've just spoken about. Thank you. Good luck.