a Further Loan against your existing property

A further loan / second bond is usually beneficial for those homeowners who bought their property a while ago. Say for example you bought your home five years ago for R500 000 and the home is now worth R 800 000, you will be able to take a further loan for the amount of R 300 000. Homeowners who are bond-free can also refinance their properties to raise some capital.

When applying for a further loan / second bond, your home will be appraised to determine its value and your credit file will be reviewed. The bank or lender will order a title report on your property to search for any liens that might appear. If the bank or lender is satisfied with all these items, the loan is likely to be approved.

Unfortunately, there will be costs involved in taking a further loan. These costs include second bond registration costs, conveyance fees and the appraisal fees. The total of these costs is usually only about 1% of your total loan amount, but must still be kept in mind. Your monthly instalments will become bigger, so make sure you can afford it before you apply for the loan.

It is advisable to use further loans for funding additional investments on your property, as this will improve the value of your property even more. With the property market in South Africa at this stage, you never know if your property’s value will rise or fall in the next few years. Your property’s value might have grown from R 500 000 to R 800 000 in the past few years but it might depreciate in the next few years, leading to negative equity.

Further loans can be used to finance renovations to your home, but some homeowners use the money to buy new cars, consolidate their debt or for other capital expenditure. This is one of the cheapest ways to access finance because home loan rates are typically the lowest of all other financing methods.

We will give you free advice on the questions you might have about the costs associated with further loans and we can help you understand the personal financial planning implications of a further loan. We will also be able to renegotiate the interest rate you are currently paying on your home loan as your loan-to-value ratio improves.

Benefits of applying for a Further Loan against your existing property

• You get fast access to a loan
• To release cash tied up in the value of your house
• Access to cash when you need it
• To use surplus cash released to reduce other expensive forms of debt
• You benefit from a low interest rate
• To restructure your home loan over the maximum period to reduce monthly cash flow
• Easy to manage

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

The Monetary Policy Committee’s decision on Thursday to keep the repo rate at 5.5% and prime lending at 9% comes as no real surprise and offers a continued respite to debt burdened homeowners.

This was widely anticipated and is welcome, said Dr Andrew Golding, CE of the Pam Golding Property group, particularly against a backdrop of rising oil and food prices coupled with increasing electricity tariffs.

“Consumer spend generally remains cautious as a result of ongoing concerns regarding household debt.

“And amid market speculation regarding an end to the current cycle of lower interest rates, it is hoped that interest rates will remain stable at least for the remainder of this year in order to stimulate further economic growth, bearing in mind that job creation remains a key focus,” said Golding.

He said that from a residential property perspective Pam Golding Properties continues to see a gradual, albeit modest improvement in sales volumes and in house prices. “It should be borne in mind that we are still seeing the effects of the latter part of last year’s reduction in interest rates permeate through the marketplace, helping sustain residential sales across most price sectors.

“However, although relaxed to some extent, strict bank lending criteria continue to keep a rein on any significant recovery in the housing market,” added Golding.

He said that while it’s true that interest rates are at a historical low, first-time buyers entering the market still face affordability issues. This is “due to the higher municipal rates and increased electricity costs, among other costs inherent in the purchase and upkeep of a home, and this is exacerbated by restricted access to finance.”

“On a positive note, what we are noticing is that those sellers who are receptive to pricing their homes at realistic, market-related prices are reaping the benefits and achieving sales,” said Golding.

He said that for investors who have access to finance or with high liquidity, there are still good buys to be had, as property prices in the main have remained relatively constant over the past year or so. “Having said that, there are many areas or locations where properties continue to achieve sound growth in value, and will continue to do so, making the case for investment in property as valid as ever”.

While most remain cautiously optimistic about continued economic recovery, said Adrian Goslett, CEO RE/MAX of Southern Africa, there are definite signs of improvement. “Aside from the interest rate remaining stable, The South African Chamber of Commerce and Industry’s Business Confidence Index for January 2011, which is at 87.4, indicates a vast improvement from January 2009 (82.4) and 2010 (81.2).”

It is anticipated that 2011 will be a fairly flat year for the property market, said Goslett, as debt-to-income ratios are still at a relatively high level and as distressed homeowners continue to make use of the various bank programmes to assist them in selling property they can no longer afford.

“As there is still limited access to finance, rental markets are expected to peak while qualified buyers will be able to make the most of the property investment opportunities that are currently there for the taking, a situation which certainly won’t last forever as interest rate hikes are expected later in the year,” said Goslett.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za