As we head into a new year that finally holds the promise of an end to the toughest recession seen in years, now is the time to give some serious commitment to your financial new year’s resolutions. If there were ever more worthy resolutions to stick to and push through, then this property advice from the Leapfrog Property Group is well worth sticking to. “An investment in property probably represents the biggest financial outlay most people will make in their lifetime. Property is always a great asset but it requires prudent financial management. Even seemingly small changes can make a dramatic impact on your savings and given the hard lessons many of us have learned in the economic downturn, it really pays to get on top of your financial situation and make some changes for the better,” says Bruce Swain, Managing Director of Leapfrog Property Group. Leapfrog’s top new year’s property resolutions:
•Negotiate your rate - compare the ratio of your outstanding home loan balance versus your actual property value. If your outstanding bond is only 70% or less of your actual property value, then you pose a significantly lower lending risk to the bank. Make an appointment with your banker and renegotiate a new interest rate - you will be amazed at the saving you can make with one or even half a percentage decrease in your interest rate. To illustrate: Bond amount: R600 000 Payment term: 20 years Monthly repayment at 12%: R6 607-00 per month. Monthly repayment at 11%: R6193-00 per month Monthly repayment at 10% R5790-00 per month Monthly repayment at 9% R5398-00 per month
•Pay extra into your bond - If you can afford to, put any saving straight back into your bond account to bring down your overall interest and repayment term. If you have a couple of hundred Rand spare cash each month or even a lump sum such as an annual bonus, plough it straight back into your bond – it makes a very significant difference to your payment term and the interest payable. To illustrate: Bond amount: R600 000 @ 10.5% paying an extra R200/pm: Reduces the repayment term by 24 months and equates to a saving of R143,760-00 @ 10.5% paying an extra R500/pm: Reduces the repayment term by 50 months and equates to a saving of R299,500-00
•Plan your real estate strategy - On average, the typical South African home owner moves approximately every five years. If you are a growing family, try and buy to solve potential future challenges such as being close to crèches and schools, having an extra bedroom for a new family addition or stand-alone quarters for a live-in domestic worker or income-producing renovation. Or maybe you will be downsizing in a couple of years and need to plan your retirement.
•Keep improving on your property - Visit show houses in your area to see what the current and latest trends are in terms of home improvement. This will give you a good idea on what finishes and utilities the market is expecting. Though property is often your largest investment, the house you live in should make money for you over time if you keep up to date. Some simple examples – if you’re planning a kitchen revamp, consider gas appliance installations. Geyser burst? Why not look at a gas geyser and solar geyser panels. With our current energy crisis set to stay with us for at least another 8-10 years, consumers are increasingly under pressure to get their homes as energy efficient as possible. A visit to your local architect will show that many houses currently in the planning stage are being designed with an additional outside storage room to house gas bottles and “whole house” generator sets. And remember that regular maintenance is essential to avoid big costs on repairs in the long run.
