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Settle your bond faster
Alternatively, most banks have a more aggressive option whereby you can have your home loan repayment automatically increased every year. You can decide whether you want an annual percentage increase, a rand amount - or you can opt to ramp up payments so that the home loan is settled in a specific timeframe (like before you retire or in say 8 years). Usually, you can adjust these payments - or opt out of making them - at any time, without penalties. If you have a lump sum available and want to settle your home loan in one fell swoop, you usually have two options.
You can pay off all the outstanding monies (the principal debt plus interest and charges), but not cancel your bond. This means that you keep access to the loan amount; the relatively low interest on a home loan makes it the cheapest credit around. However, make sure that your bank does not continue to levy insurance premiums each month (you are forced to take out cover for the property when you get a home loan) - a common problem. Alternatively, you can cancel the bond. You will have to give some notice, usually three months. If you want to cancel it within a shorter timeframe, penalty interest will be charged. Given the huge amount of interest you'll save, paying back your home loan early looks like a no-brainer. However, it doesn't make sense to pay off your home loan debt if you have any other outstanding debts with higher interest rates. Settle more expensive debts first before you tackle your home loan.
How can I buy my first home?
Transfer DUTY vs Transfer COST
Transfer cost and transfer duty are two separate things and transfer duty is only a small part of transfer costs to be paid in a property transaction. For example, a property of R750 000 will have transfer duty of R0 (Zero) but transfer fees of approximately R30 000. Banks don't finance transfer costs or transfer duties, so you need to save before you enter into a property purchase transaction. This implies you have to rent until you have the funds together, if you are a first time buyer. There are ways to finance these costs with other means such as a personal loan or your credit card budget facility at a higher percentage interest that that of the home loan itself.Home loan debt is one of the cheapest forms of credit there is in terms of the interest % charged and period allowed over which to repay the loan.
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SARB interest rate adjustments
Owning a home is still a dream come true
A positive property market
Think long term
In 10 years time, the bond repayment is still R5000* while the rent will be R7423 at 8% inflation annually. When buying, the monthly cost becomes negligible over time - If the same property was bought 20 years ago, the payment would probably be less than R1000 monthly today. And, after the 20th year the property is fully paid up with no more monthly bond repayments. After 10 years from now the R500000 property of today, could be worth R742,300 at 8% inflation annually, implying a R242,300 profit on selling. Unfortunately, most seldom think long term.
(*There are fluctuations in interest rates, but it will be much lower than the R7423 rental at the same period in time and has the possibility to increase or decrease)
Property in for a good run
due to good current fundamentals
Property market returning to a seller's market...
With banks now offering 100% bonds across the board* and prime and mortgage rates currently at 10,5%, the same as it was at the low point in 2006, property is returning to a seller's market with many more buyers currently searching for the right property to buy. Luckily there are still many bargains to be had. The repayment on a R500,000 property is now still only R4660, calculated over 20 years @ prime less 1%, with no deposit and 100% finance. This is very close to the amount to be paid when renting a similar property.
(*FNB, Standard Bank and Nedbank now offer 100% bonds to buyers, and deposits are thus no longer required - also, one no longer needs to be a customer of a specific bank to obtain a 100% bond, it is also granted to non clients.)
Investors are seeing better returns
Rental returns are becoming stronger and stronger every day. People with
investment properties are seeing a better return not only from rentals but from
ongoing drops in interest rates. Investment purchasing has overtaken first time
buying at the low end of the market in the last few months. This is attributed
to ongoing interest rate cuts which are closing the gap between purchase prices
and rentals, making it easier for investors to service their bonds with the
rentals they are able to command.
Getting a home loan
Banks only approve the best applications and the client needs to be in a strong financial position. Banks look at prompt payments of accounts on a monthly basis, look for any unpaid debit orders, and in some cases will not consider an application for six months after a late payment, even if it is only a store account.
We recommend that the home loan application be discussed with an experienced agent, even before the search for a suitable property starts. The agent will be able to advise at which bank the best chance to obtain a home loan lies, according to the particular bank's current lending criteria. Buyers are also advised not to apply at all banks at the same time, but to apply at the bank where the best chance for success lies. Due to the requirements for financial transparency, banks know when an application has been sent to more than one bank, and gives preference to individual applications at one bank. Banks prefer clients that have a banking history with them.
Clever investors will be well rewarded for renting out their properties, as they can raise rentals over time dependent on market conditions, and collect a bigger profit each year. If you are considering buying for investment, remember rental collected on a paid off property can be seen as passive income, i.e. you do not have to go to work daily to earn it. Property is a long term investment, and property owners will enjoy the capital growth annual rental increases on their investment over the long term.
Also note that for a 100% bond, the interest rate is in some cases not as good as if the client is able to put down some deposit such as 5% or 10%. It is also possible to use the budget facility on your credit card to pay for transfer costs and full/partial deposit dependent on how much credit you have available. You can also ask the bank to increase this credit facility to the allowable amount according to your income which may have increased (banks are no longer allowed to increase this amount automatically). Some attorneys will also consider payment plans for the deposit and/or fees. You can also a niche banks such as Virgin Money. Absa currently offers a pension supported housing loan, no funds is extracted from your retirement benefit, and a credit life policy ensures your bond is settled on death, disability or retrenchment. It is also possible for the client to apply for a personal loan Personals loans can be obtained for up to R100000 by completing a simple 1 page form and the rest being telephonically arranged. If you have a fully paid up property, we will be able to motivate for a 100% loan with the current property being security. Employees of Eskom can also obtain 100% loans.
We sell it faster
Our advice to sellers for selling quickly is to ensure your property is neat and appealing to buyers, and priced in line with current market conditions. Your agent, that deals with buyers and sellers daily, has a very good idea of the current market related price. Centurion Real Estate employs a local focus and strives to serve the people wanting to live in Centurion with better service and more local market knowledge on townhouse complexes than anyone else in Centurion. We will sell it first. Talk to a Centurion Real Estate agent for more information.
Buying townhouses for investment now more lucrative
With most asset classes (unit trusts, money markets and other savings instruments such as retirement funds) performing poorly due to the international financial crisis, just where should you put your money now? It seems property is once again in favour as an investment with the number of inquiries for properties for sale from investors increasing. Some properties which did not even get a single visitor in the last few months, are getting several viewings now.
Unfortunately, banks still require a minimum of a 10% deposit, and YES even for first time buyers! This means first time buyers are currently trying to get a deposit together, opting to rent rather than buy, which means higher rentals for investors. Also, with minimal new developments due to Eskom power restrictions, finding property for sale is becoming a problem as we enter a sellers market.
Remember, South Africa is a sophisticated emerging market with well developed financial, legislative and communications sectors. Also, South Africa has a fast growing middle class and we have instituted the National Credit Act (NCA) which has helped us weather the credit crisis.
Centurion is a great area in which to buy it will have a Gautrain station, and currently has better prices on property than in Hatfield, Sandton and Midrand. Centurion has a good vibe and mostly low rise developments still giving it that rural feel.
Centurion also has a fairly young population mix made up of students, young working people, and families. Many companies are currently relocating to Centurion just take a drive through Highveld TechnoPark, where 10 years ago there were almost no developments. The area also boasts a residential development, Eco Park Estate, comprising some 1 700 townhouses with a state of the art biometric security system and clubhouse with squash, tennis, gym and other recreational facilities.
Remember, it is always better to buy than rent, so if you are considering buying property, act sooner rather than later. Contact one of our experienced property consultants to find out more.
Our team helps more people move than any other agent or team in Centurion. We want you so satisfied with us that you will gladly refer us to your friends. By subscribing to our newsletter, you'll be the first to know when a new property is placed on the market. Find out before other buyers! If you are a home seller, find out how properties are extensively marketed for people like you. To view up to the minute reports and statistics of our website visits, please click here. In addition, all our properties for sale are also listed on 30+ other property related websites. List your property with us!
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Why hasn't my house sold?
Selling a home is one of the largest financial transactions that
people make in their lifetime. And, pricing your home correctly is
the most important factor in getting your home sold. In todays
market, pricing your home fairly and competitively is even more
critical. In fact, the right price is the key to attracting showing
Take a look at a time when you could buy a large 3 bedroom house on a large stand for only R7000
Price it Right
Pitfalls in selling your home - did you make provision for an additional interest charge by your bank?
Measuring Investment Property Returns...
Centurion lifestyle keep prices buoyant
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