How's your homeloan?

By Staff Writer

As everyone must know by now there is a global financial crisis going on. It started in the US sub-prime homeloan market which was using derived risk tools to sell homeloans on as financial instruments. They just forgot the fundamental law of diversifying risk: you have to diversify across asset classes not through asset classes. This global meltdown has had knock on effects worldwide and South Africa is no exception. The housing market here is falling and expected to continue to do so. Is there anything you can do about it? 

Now is not the time to sell. The market is expected to go down further and the banks are requiring bigger deposits and declining more applications. The National Credit Act has saved us from some of the worst that could have happened here if we were allowed to invest in he now crashed global market as much as we wished. Banks will not just lend to you they are required by law to do their homework and make sure that they are not engaging in risky lending practises. Now if you use a budget planner you will have a much clearer idea of exactly what you have to spend on a homeloan, and the bank will also be creating this data.

With the increase in declined homeloans showing that the banks are doing their due diligence you should too. After you have planned your budget set aside a monthly amount into a savings account, set up a direct payment so you never see that money so never miss it. Then plan over the next two to three years to save up the required deposit. By that time, if there are no more major economic shocks then you should have the deposit for your homeloan, and the market should have properly bottomed out and the economy recovered enough in order for you to buy low and expect the housing market to re-enter the growth cycle. The last growth cycle lasted eight years, the next one won't start for a few years.

Recent Articles

Featured Which one should you get first: life cover or a retirement annuity?

Financial planning can be a brain-racking process because it means making difficult decisions such as choosing the most suitable products for you. The one challenge faced by those who are financially constrained is which product to choose: life cover or a retirement annuity (RA).

Read more

Should you save or invest your money?

While saving means putting away cash for future use, investment involves purchasing assets which will yield good returns in the future.

Read more

Retirement annuities compared – pick the one for you

When selecting an RA you must know the type of annuity you are investing in. Retirement annuities are divided into two categories: traditional and new generation annuities.

Read more

Recent tax changes – how do they affect you?

In January this year, various amendments to the Taxation Laws Amendment Bill and the Tax Administration Act were announced. While some changes will benefit you, others could be to your disadvantage. Justmoney looks at how some of the recent changes will impact you.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Save R100 when you buy a tracker at Takealot

Price: R289
When: Daily
Where: Online

Pamper yourself and partner for less at Bakwena Day Spa

Price: From R999
When: Until 31 July
Where: Hartbeespoort

Pay only R35 for the new Nandos Boujee Bowl

Price: R35
When: Daily
Where: Nationwide