Starting out on life’s journey as a married couple wanting to start a family is very exciting especially if you are considering buying your new home. Or are you a business entrepreneur that has decided to rather buy business property instead of renting it? Either way, when buying property and when applying for a home loan there are various factors that are taken into consideration before the loan can be approved. Basically the property and the surrounds need to be taken into consideration to determine a fair market value of the property. This is referred to as a property valuation.
Factors that determine whether a loan will be approved
- Geographic location – many banks prefer to loan money for property that is in an area that is easily accessible. The reason for this is that a bank representative will be able to service the loan better if the prospective buyer is intending on buying in a hub area.
- Nature of the property – approval of a loan is based on what the property will be used for. Whether a property is residential, commercial, agricultural or industrial will have an impact on the property valuation.
- Current use of the property – the bank will check if the current property is vacant, tenanted or self-occupied. What the property is currently being used for will also determine how the property valuation is done, for example is it a residential property that is being used for industrial use?
- Property in a risk area – geographical occurrences in the area affect the value of a property. For example if you intend on buying property in an area that is prone to flooding the bank will deem this as a risk and might not afford you the loan.
- Age of the building – if you intend on purchasing a building that is considered as old, the bank might not be too eager to grant you a loan. The bank will determine the “life-age” of the building and based on that will decide the loan amount they are willing to grant you.
- Approved paperwork from the local authorities – as a potential buyer you need to make sure that you have all the necessary and legal paperwork for the property you are intending to buy. Banks will see these documents during the legal evaluation of the property.
- Maintenance of the property – the amount of upkeep on a current property plays an important role in the property valuation. Buildings that have been well maintained will fetch a higher value than those that have been neglected.
And you thought that buying a property for residential or commercial use would be pretty simple! These rules, or guidelines, are in place to protect all parties involved in the buying and selling process. A property valuation is of vital importance as it will make sure that as a buyer you are purchasing at fair market value and as a seller, that you are getting the best value on the property.
If you are in the process of selling or buying a property and require a property valuation to be carried out then you need to get into contact with The Property Partnership. The Property Partnership will make sure that the valuation is conducted in a fair manner and have your best interests at heart. From property rentals to property valuations, The Property Partnership will be able to assist you. Visit their website, www.property-partnership.co.za, to find out how they can help you!