Yearly Archives: 2017

Find Out Why Home Maintenance Pays Off

If you’re about to apply for a home loan, you should build a specific provision for home maintenance into your monthly budget, says Shaun Rademeyer, CEO of BetterBond, SA’s biggest bond originator.

“Many people don’t know this, but there is actually a clause in most mortgage agreements that obliges the borrower to keep the property in good condition – presumably so that the lender can be assured that the asset which is securing the home loan will retain its value.

“And certainly, banks will turn down home loan applications these days unless potential house buyers can prove that they will have sufficient disposable income to be able to afford maintenance and ongoing costs such as rates and levies, in addition to their monthly bond repayment.”

However, he says, there is also a big advantage for home owners themselves in “thinking maintenance” from the time that they first move in, and that is that they will be able to get the best possible price for their property if ever or whenever they decide to sell it. “Whatever the state of the residential property market, it’s a fact that the homes in the best condition not only sell faster but at higher prices, so it definitely does pay to make steady investments of time and money in keeping your home in shape.

“This is especially so in the current economy, where various events such as retrenchment can affect your ability to keep up your home loan repayments and necessitate a quick sale in order to ‘cut your losses’ and keep your credit record intact. The last thing you want to have to address if that happens is years and years of deferred maintenance which is either going to cost you a lot to catch up or lower the price that you can expect for your home.

“On the other hand, if you have kept your property in good condition, it will be that much easier to add that extra show day ‘gloss’ to attract lots of potential buyers and achieve a satisfactory sale.”

Rademeyer notes that while home owners are often reluctant to spend any more on a property they are about to sell, it is definitely worth making the effort to ensure that their home is well-presented and compares favourably with other listings in the same area. “The majority of those interested in buying a house want to see a home that clearly does not currently require work or expenditure on repairs and improvements, and they will pay more for that.

“It is also very useful for home owners to keep a record of all the improvements they make and repairs they undertake during their period of ownership. This evidence of regular upkeep will be a further attraction for potential buyers.”

 

 

Protect Your Money When You Buy Off-Plan

Homebuyers who purchase “off plan” – or in advance of their house actually being built – need to know that they will usually have quite a few more money issues to deal with than those who buy a pre-owned house.

So says Shaun Rademeyer, CEO of BetterBond, SA’s biggest bond originator, who notes that about 10% of the home loan applications being received currently is for off-plan purchases in new sectional title developments or to build new houses in estates where the prospective owners have already bought a stand.

“And of course there are many advantages in buying off-plan homes, including the fact that you can often customise them to suit your own needs and preferences. Even in apartment and townhouse developments, buyers can usually choose their interior fittings and finishes according to their personal tastes and budgets.

“In plot-and-plan schemes they can often also choose the size and floor plan of their homes, while owner-builders in estates usually only have to follow the basic architectural guidelines while designing their dream homes.”

However, he says, there are many potential pitfalls when it comes to paying for a home that doesn’t exist yet, and buyers need the correct information to be able to avoid them. “It is very important, for example, for buyers to know that they should never pay a deposit for an ‘off plan’ home, or even sign any agreement to purchase such a home until they have thoroughly checked the credentials of the developer and /or the builder.”

“They should also be absolutely certain that any deposit they do pay will be held in trust by an attorney or a registered estate agent – and be repaid to them with interest if the development does not go ahead within a specified time. There have been far too many cases in recent years of bogus estate agents, builders’ agents and construction companies printing up glossy brochures and taking deposits for proposed ‘developments’ before simply vanishing.”

“There have also been many cases of underfunded and half-built projects being delayed by months and even years, while the developer hangs on to the deposits of buyers – and any further amounts that they may have paid – because there was no cut-off date in the original purchase contracts.”

When a new development is launched, Rademeyer says, prospective buyers would also be well advised to see whether the developer has partnered with a bank or a reputable bond originator such as BetterBond to assist them to obtain the home loans they will need. “This is a good sign that the development is legitimate and that the developer has already secured the necessary finance to finish it.”

“In addition, buyers will immediately be able to get a professional assessment of what they can afford and whether they are likely to obtain the home loan they want, or whether they first need to work on their credit record or pay off some debt.”

And on this subject, he says, those planning to buy into a sectional title or estate developments – which is where most off-plan purchases occur – must remember to budget for the monthly levy as well as their home loan repayment and other regular expenses.“They should also make sure exactly what the levy covers – and by how much it is likely to increase once the development is finished. There could be quite a steep jump once the last unit is sold and the developer is no longer involved and no longer subsidising certain costs.”

“They should also make sure exactly what the levy covers – and by how much it is likely to increase once the development is finished. There could be quite a steep jump once the last unit is sold and the developer is no longer involved and no longer subsidising certain costs.”

Rademeyer says that those who purchase a sectional title unit “off plan” should also take into account that it is the developer who will have a direct contract with the actual builder, and that they will probably have very little control over the quality or speed of construction.

“This makes it especially important in such instances to buy from a developer with a track record of maintaining very high standards and delivering on time because ultimately it is your money at risk.”

On the other hand, those who are buying a freehold house off-plan are likely to have their own contract with the builder, who will be paid in instalments, or “draws” from their building loan as certain stages of the building work are completed. “And since they will have to sign each draw form authorising the bank to pay, they will have a large measure of control over the way the work is done.”

“In fact, we recommend that they visit their home building site as frequently as possible and monitor the workmanship closely, so that any problems can be rectified immediately – and certainly before the builder collects the last draw and they have to start repaying their home loan.”

The Rental Agents Guide to Dealing with Property Damage

One of a rental agent’s major functions is ensuring that your client’s property remains in a reasonable state of repair. This is important – damage to a rental property eats into the potential profits that can be realised.

To help minimise the possibility of tenants causing damage, and to lower the chance of making a loss in the event of damage, use these tips:

Watch out for tenants leaving early

A large portion of damage to rental properties is caused by tenants leaving early. Because tenants who do this often leave bills unpaid, it can lead to a big problem for rental agents and owners alike.

In order to keep the possibility of this happening to your rental properties to a minimum, it’s worth keeping an eye on the pattern of payments made by tenants. Repeated late or erratic payments could be an indicator that your tenants are likely to leave early, and with you holding the bill.

Unfortunately, while this can be a useful indicator, on its own it’s not enough to protect you – other steps need to be taken.

The right deposit

The first part of making sure you don’t get caught out involves the security deposit.

Traditionally, this is equal to one or one and a half months rent. However, this may not be enough to adequately cover any damages.

For this reason, we’d encourage you to ask for two months’ rent as standard. This will serve the dual benefit of discouraging your tenants from causing damage in the first place (as they stand to lose more money), and will more effectively cover any damage and unpaid bills that you do have to deal with.

Adequate inspections

Regular inspections are the most effective way to ensure that your property is protected. These should include incoming and outgoing inspections, as well as regular interim inspections.

While the vast majority of contracts will include these as a matter of course, the fact is that not many agents or owners take the time necessary to carry out these inspections, even when they could be saving them a lot of money.

During in your inspection, take note of not only any damage in evidence but also the general attitude in which your tenants live. This can be a big tip off in how they treat the property generally.

Insurance

But what if, after you’ve done all of the above, you’re still left with damage? This is when rental property insurance steps in.

Unlike home or building insurance, this type of insurance is specifically targeted to rental owners. It’s designed to protect you against not only damage but also non-payment of bills. It’s your last line of defence and it is well worth the price of admission.

BetterRewards Dream Lottery 2016 September Winner

Share the excitement as our CEO Shaun Rademeyer surprises Goodman Serahanye, September’s Dream Lottery winner with R60,000! Goodman has dreamt of taking his parents on holiday to Cape Town. This will be their first holiday ever! How wonderful for Goodman to share this special experience with his much-loved parents in making their dream come true.

The Igniting Dreams Initiative

What is The Igniting Dreams Initiative?

BetterLife Home Loans believes in making dreams come true and in the process changing the lives of others. Through The Igniting Dreams Initiative, we want to encourage everyone to submit their dreams for change – whether it is for yourself, an individual, a community or charity in need. Enter your dream and help us to change lives!

Why did we create The Igniting Dreams Initiative?

Our vision is to build a world-class home services business by making the home journey an amazing experience. Not only do we aim to change our customers’ lives for the better, but we also want to make their dreams come true. We want to inspire through awesome service. We want to proudly live our brand, and strive to make a difference, every day!

Why you may not want to close your home loan account

Considering that most homeowners have a loan that is costing them up to 30% of their monthly income in repayments, it isn’t surprising that the majority want to get it paid off as quickly as possible.

However, says Shaun Rademeyer, CEO of BetterLife Home Loan, SA’s biggest mortgage originator, closing your home loan account completely is not necessarily the best course of action for everyone.

“In fact, even if you have a very low balance that you could easily pay off, deliberately keeping your home loan account open could prove very useful if you ever need to borrow money again – to finance a child’s education, for example, or to cover a family emergency or even invest in another property.

“Borrowing against the equity in your home by extending your existing mortgage again will definitely be the cheapest way to go in these circumstances and should also be relatively easy to do, compared to having to apply for other forms of credit.”

He also says that the longer you stay in your home, the greater the risk of you becoming “house rich and cash poor” – or owing nothing on your bond but at the same time lacking sufficient funds to pay for the upkeep of the property, including rates and taxes, routine maintenance and proper insurance.

“However, as the value of your home increases over time, so will the equity that you can use to maintain it – provided that your home loan account is still open.”

Rademeyer hastens to add, though, that this does not mean that homeowners who are currently using a large chunk of their discretionary income every month to reduce the capital portion of their home loan as quickly as possible should stop doing so.

“They should know that when you put extra money towards paying off your home loan, what you are actually doing is eliminating a non-tax deductible expense, and that this is essentially the same as making a tax-free investment.”

At the moment, he notes, the real rate of return on paying off your bond is around 4,3% a year, after inflation at 6,2% is subtracted from the current home loan interest rate of 10,5% and there are of course many who will point out that they can do better than this by investing their extra cash elsewhere.

“But before they do, they need to consider that other investments like shares are generally much riskier than real estate and that dividends are taxed. In addition, many homeowners are motivated to pay down their home loan as fast as possible so they can live virtually rent-free while investing wherever they please.”