Save R320 000 on a R1 million property
My Budget Fitness - South Africa
You may be well aware of the strict lending criteria applied by the banks since the introduction of the National Credit Act and the potentially intimidating process that you have to go through for home loan approval. As such, you may be only too pleased when the bank finally grants you a home loan – and in fact so thankful for the ”approval” from the bank that you do not challenge the interest rate “proposed” by the bank.
For example: If your interest rate is 2% above the prime lending rate, then your R1 million rand home loan can cost you a whopping 32% (R320 000.00) extra at the end of your home loan repayment period. This is surely indication enough to make you rethink the approach you take before you ask the bank for a home loan, advises Meyer de Waal, conveyancing attorney.
The factors that will have a major impact on your home loan approval will be your current credit rating and profile, as well as your exposure to debt and affordability.
Save over R300 000 on a loan of R1 million
Commercial versus residential property as an investment
Rawson - South Africa
The question which he is regularly asked by potential property investors is, “Should I put my money into commercial or residential property?” Bill Rawson, Chairman of the Rawson Property Group, said that both types of property have the big advantage of being gearable – the investor who already has a good income stream can usually borrow a high percentage of the property’s price from a bank or other financiers, thereby benefitting from property’s main advantage in relation to other asset classes - the fact that it can be purchased with borrowed money.
However from there on, said Rawson, the differences between the two types of property are fairly wide and in general make residential property the better choice for the less experienced investor, particularly one with limited financial or property experience. Residential property, especially in the current South African market, is easily tradable and/or rentable. Buyers and tenants are fairly thick on the ground – and, if the property is rented, tenants are easily replaced.
Credit and mortgage advances
Absa - South Africa
Continued low growth in household credit and mortgage balances
The general state of household finances impacts the demand for property, which is to a large extent affected by the affordability and accessibility of mortgage finance. The financial strain experienced by many consumers is currently driven by low employment growth, rising living costs, declining real income growth, low savings, an upward trend in interest rates and a significant level of impaired credit records, with these factors contributing to low consumer confidence. These trends are eventually reflected in property market conditions, such as market activity, buying patterns, building activity, property prices, demand for mortgage finance and transaction volumes.
In view of these developments, growth in household credit, including mortgage advances, is expected to remain subdued up to the end of the year and in 2015.
Credit and mortgage advances
Property leases buttressed by case and common law
IolProperty - South Africa
The rental Housing Act of 1999 is the main law that applies to a residential tenancy agreement between a tenant and landlord. Other laws, or certain sections of them, may also have a direct bearing on the agreement and the contractual relationship between the parties. The following are some of the relevant laws:
- The Constitution of the Republic of South Africa 1996 is the supreme law of the country, which set outs the Bill of Rights and the relationship between state and individuals, between individuals and the relationship of government structures.
- Case law, or court decisions, play a critical part. The courts' judgments (precedents) are part of our common law.
- Common law directs tenancy relationship not covered or changed by the Rental Housing Act or other laws.