Seven realities of the SA real estate crisis
Borrowers can still buy and sell their homes at a profit - despite all the economic doom and gloom - if they get the right advice, according to www.justmoney.co.za, South Africa's online guide to money.
Paul Beadle, managing director of www.justmoney.co.za, says consumers must not be panicked by the current tales of woe from property experts and mortgage lenders. He
explains: "We are being bombarded with bad news caused by a series of events; higher interest rates, soaring debts and cost of living, and a softening of global financial sentiment.
"All of these major factors impact on how the property and home loans markets are viewed, but ultimately owning, buying or selling a property is a personal affair and people need to get specific advice from professional and independent mortgage adviser to ensure they make the right home loan decision."
Beadle says there are seven realties that home owners should consider when buying or selling a property - as well as helping them to ensure they can continue to pay their current bond.
1. Affordability is king - Whatever decision you make, to buy, sell or stay put, you must ensure you can afford to pay your mortgage, both now and in the future if the interest rate should increase.
2. It's a buyer's market - House prices are falling, which makes it a perfect time to buy, particularly for first time buyers - but only if affordability is right. Don't be rushed into buying, find the right property and negotiate hard.
3. If your property has lost value, then so has everybody else's - In the property boom many homes were overpriced. If your house has lost value, remember the home you want to buy will probably also have decreased. So long as you are not in negative equity (where you house is worth less than the mortgage you have on it) the same rules of buying and selling apply.
4. If in doubt, stay put - If you are thinking of buying a more expensive property, but are unsure about future affordability, then don't move. Rather put your extra cash into paying off your current mortgage, or perhaps invest in renovations to increase the value of your home.
5. Being a property owner is not everything - If you're struggling to pay your home loan, then consider selling - it is better to sell and get some money back than default on your mortgage and have the bank take your home away. In fact renting might be a cost-effective option, at least in the short-term.
6. Buy-to-let properties are not made of gold - Many would be andlords are investing heavily in rental properties - but buyer beware! Rental income is usually a lot less than mortgage payments, there's a lot of extra cost involved in renting out a house, and there's no guarantee that the value of your buy-to-let property will grow to make the investment worth your while.
7. Get professional, independent advice - A mortgage broker will be able to negotiate with a number of lenders to find you the best deal, whereas a mortgage originator only has ties with a handful of lenders.
And a mortgage adviser, such as those www.justmoney.co.za works with, can also give you debt advice, whether it's debt consolidation or debt management, to help you out before you lose your property.
www.justmoney.co.za has been created to help South Africans save money by demystifying financial services and helping them to make informed decisions about their money.
Completely independent and unbiased, www.justmoney.co.za also features a host of comparisons, tools and guides, enabling people to search and apply for new products, all online and completely free of charge.