How much home loan is right for you?

One of the biggest attractions of an investment in property is the fact that it is relatively easy to gear the purchase – that is, to use someone ease’s money to cover most of the purchase cost.

Lenders are happy because their loans are secured by bricks and mortar assets and, for the borrower, there is always the chance of a quick gain from rising property prices.

Consequently, borrowers are often tempted to go for the highest possible gearing ratio, with a low deposit and a high proportion of the property cost borrowed.

“But borrowers need to consider that a bigger deposit generally means a better chance of a home loan at the most favorable interest rate, and that the loan can be paid off or at least reduced more quickly – which means that the property owner will have a bigger capital gain when the time comes to sell.”

Before they go house hunting, potential buyers also need to determine what size loan they themselves feel comfortable about repaying.

“Financial institutions will determine the maximum they are prepared to lend based on the borrower’s credit record and current income and debt commitments, and with interest rates currently so low, borrowers may well find that they qualify for bigger loans than they anticipated.

“This does not necessarily mean, however, that they should immediately opt for a more expensive property or a higher gearing ratio. Determining what size loan is right for you remains a personal decision and should take into account your overall investment strategy as well as the property in question.”

The buyer of a newly built property, for example, may need less cash to cover transfer costs or improvements and be able to put down a bigger deposit, while the buyer of an older home may decide to take a bigger loan and keep some cash in hand to cover the costs of repairs and renovation.

“In general, though, it is good advice to put down the biggest possible deposit and keep the amount borrowed to the lowest level.

“And the final decision should only be made after careful consideration of the probable future trend of interest rates and after shopping around to ensure the best possible current rate on the loan.”

Here’s some calculators to help you make the right decision:

Affordability Calculator

Bond Status Calculator

Increased Installments Calculator

Minimum Income Calculator

Monthly Payments Calculator

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

5 no-no’s when selling your home

Sellers are understandably usually quite emotionally attached to their homes, and in being so, can often be their own worst enemy, potentially jeopardising a successful sale.

International real estate trends expert, Steve Murray, who is also the editor of REAL Trends, a trends research and publishing firm based in Colorado, will be visiting South Africain August by invitation from RE/MAX of Southern Africa, to share some of his key property insights with local agents.

Peter Gilmour, Chairman of RE/MAX of Southern Africa, says that Steve will undoubtedly enrich the working strategies of many of the agents he comes into contact with. “While we are certainly well on the road to a market recovery, current market conditions remain somewhat challenging, and any real estate professional could certainly benefit from tips and insights to better their working practices.

However, says Gilmour, estate agents are not the only ones who need to up their game. “In order to get the best price for their property in the shortest possible time, sellers need to up their game too.”

He refers to an article recently published on real trends courtesy of Brendon DeSimone, a realtor based in San Francisco, a contributor to the Zillow Blog, and collaborator on multiple real estate books, which describes five things that sellers do that could potentially jeopardise a sale.

The article notes that home sellers today are under a lot of stress. It’s a tougher market, home prices have fallen and many are trying to get as much money as possible to recoup their investment. While real estate agents feel sellers’ pain and are on their side, sellers sometimes do things that make it harder for an agent to sell a home for what it’s worth.

Here are five not-so-great things sellers do that make their real estate agents cross their fingers and hope for the best:

1. Sellers who think their property is unique, thus worth more money
Sellers consider their homes special; most likely they’ve put a lot of heart, soul, and money into fixing it up. It may be where they started a family or built a lifetime of memories. When a seller believes their home is unique, however, they also believe it is worth more. Sellers then end up fixating on an asking price that’s too high, despite the advice of an agent. If it’s priced too high, a home will sit on the market for months. Unfortunately, nine out of 10 times, the seller will end up selling for less money than they would have gotten if the home was listed at an appropriate price from the start.

2. The home is a mess
Sellers: It’s important to pick up the home before a showing. Potential buyers touring a home usually don’t appreciate stepping on a child’s toy and fail to see the charm of a dog’s discarded tennis ball. Buyers want to feel that a home is clean and well maintained. If it’s not, they’ll likely move on to the next.

3. Sellers who hang around during an open house
There’s a reason why real estate agents don’t want sellers sticking around when potential buyers arrive. While a seller may be perfectly friendly and agreeable, they can alienate buyers or make them feel uncomfortable without even knowing it.

4. Holding out for extra money at the last minute
Say a buyer made an offer that was less than what the seller wants. The agent and the buyer have gone back and forth with a series of counter offers. The seller is close to achieving their dream price but they insist on trying to squeeze more out of the buyer. In demanding more money, the seller may have created bad will, as well as stressed those involved in the purchase. When it comes down to it, extracting that extra little bit may actually cost the seller more at the end of the transaction.

5. Sellers who don’t clean up before turning over the keys
Sellers should imagine themselves as the future buyer. Would they want to walk into their new home and find twelve cans of old paint in the garage? Or an old sofa with a broken leg in the storeroom? The tip to sellers is to try to make the home as spotless as possible for the new owners. They’ll appreciate it and so will the agent.
“In the current climate, those who want to get the best price for their property are going to have to work a little harder,” says Gilmour.

“Sellers need to view their homes with a critical eye. When a person lives in a house for an extended period of time, they tend to turn a blind eye and overlook problem areas.

Learn to think like a buyer, says Gilmour, and always assume that potential buyers are going to spot the faults. “At the end of the day, sellers need to remember that a well-priced, well-maintained property will appeal far more than an over-priced, under-maintained home.”

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