South African Homeowners

Given that the average house price in South Africa is approximately R800 000 and that most people take out a hefty bond to finance their home, home owners would be well advised to prevent  additional property-related expenses by avoiding simple oversights.

This is according to Mortgage Plus Bond Originators, who advises that consumers can safeguard themselves financially by taking note of five of the most common property-related mistakes made:

1. Shop around before securing a bond

Shopping around with multiple banks and negotiating the best deal can make a big difference to your monthly bond repayments.

A bond originator is able to assist by submitting an application simultaneously to multiple lenders, ensuring a greater chance of approval and on the best terms. Originator consultants understand the different credit criteria and requirements of each bank and are able to provide independent advice to potential home owners.

Additionally, duplication of documentation is avoided ensuring fast approvals while benefiting from a single point of contact to manage the entire process. A bond originator’s service is also at no cost to the homebuyer and without any obligation to accept a particular loan sourced.

2. Under-insuring your home and contents

If you’ve made any improvements to your property since taking out your home insurance, it will have changed the value of your home. Significant changes to your house will increase the value it should be insured for, so it’s important to keep your insurer up to date with any changes.

Also, don’t forget your contents insurance as most people often underestimate how much their belongings are worth. If you purchase new furniture or electronics, then you should review your contents policy (at least annually) to ensure that you have adequate cover.

3. Failing to take basic steps to secure your home

It’s all very good and well to have a home contents insurance policy, but if you don’t take the appropriate measures to secure your property, you may find yourself seriously out of pocket if you are burgled.

If your home fails to meet your insurer’s security requirements, then your policy will become void, even if you’ve paid premiums for years. Don’t waste your insurance premiums or, worse, face having to pay to replace stolen possessions. Read your contents policy carefully and ensure your home meets its minimum security requirements.

4. Using a sub-standard contractor

Substandard home improvements can cost SA consumers millions every year and can actually reduce the value of your home, or worse, cause expensive damage. Unfortunately, the process of sourcing a reliable builder and managing a building or renovation project can be extremely stressful, but if done incorrectly can add lasting financial stress for a homeowner.

To safeguard yourself always remember to do a thorough background check on anyone who is going to take a hammer to your home. This includes requesting to see proof of their building credentials which can include memberships such as the Master Builders South Africa (MBSA).

5. Spending on improvements that add little value to your home

Not every improvement will add value to your home. For example, new carpets costing R50 000 add very little value to your property’s overall worth. However, the right paint job can add up to 10% to your home’s value.

Your first home improvement priority should be to ensure the property is structurally sound. Roofing, windows, damp proofing and the electrics should all be in top condition and if they’re not, should be at the top of your home improvement list.

Once you’ve taken care of the structural side of things, you can move on to improving the look and feel of your home. Have a discussion with your local estate agent to get some advice about what features can add the most value to your home.

Tip: If you’ve made any improvements to your property since taking out your home insurance, it will have changed the value of your home. Significant changes to your house will increase the value it should be insured for, so it’s important to keep your insurer up to date with any changes.

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

Don’t overload your home loan

It may be tempting to consolidate household debt by utilizing a refinancing option on one’s home loan, but homeowners need to be careful that they are not jumping out of the frying pan and into the fire by placing too heavy a burden on their repayments.

This warning comes from Morne Prinsloo, MD of Mortgage Plus, who adds that overloaded monthly bond repayments could result in the bondholder losing his most important asset at the end of the day through foreclosure by the bank in the event that he fails to meet his installments.

“Banks do offer convenient ways of refinancing other household debt, particularly as home loan mortgage rates are generally lower than overdraft or credit card rates at the moment,” says Prinsloo.

“But consumers need to be careful that they are not pushing up their loan repayments to unmanageable levels by doing this.”

Prinsloo adds that consumers also need to be aware of the costs associated with applying for further home loan facilities. These could include property assessment fees and bond registration costs. “Consumers should ensure that these costs do not nullify the benefits of the lower interest rate saving,” he cautions.

“Consumers also need to be careful not to finance certain items over the full 20 year period of the loan. For example, the repayments on a car only last for a maximum of five years so the consumer needs to ensure that he pays this money back into his home loan account within the same period of time by increasing his monthly repayments accordingly.”

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