Real Estate – The smart investment
Buying real estate is more than finding the right home or location for your business – owning property is an investment that holds more benefits than you might know. Income Predictability While interest rates may alter mortgage repayments at first, real estate offers a somewhat constant financial investment. Once home loans are repaid in full, real estate offers the owner a constant income that does not fluctuate with the market, an income that can increase with inflation. Of all the investment types, real estate is the safest from external influence. Increasing Value Property appreciates in value over time. Thanks to South Africa’s reliable climate, real estate investments rarely depreciate due to natural causes, so long as the property is well looked after by its tenants and owner. Appreciation levels have increased at 6% per year, on average, since 1968, meaning your investment will grow no matter what. Improve Your Investment Where other investments rely on the financial market, the greater economy and an organisation’s performance to increase their value, property value can be greatly improved by improving the actual property. With a little elbow grease and dedicated planning, you can increase the value of your investment yourself. Retirement Ready A great benefit of owning property is that it is there when you need it the most. While the initial burden of home loan down-payments on cashflow can be rather strenuous, the weight lessens considerably over the years as the principal reduction increases. This means that your cashflow will increase as you near retirement, allowing you to invest your money more appropriately. Up Your Equity While you pay off your home loan, you are also increasing your equity as your property counts as an asset in your net worth. Through increased equity you will be able to gain more leverage in financial situations, when obtaining a loan, for example, and you will be able to grow your wealth more steadily as well. Portfolio Diversification Real estate investment holds less risk than other major class investments, allowing you to create a diversified and safer investment portfolio. Through a diversified investment portfolio, you ensure that your investments are not all influenced by the same external factors, such as a fall in share value (as has been seen during the COVID-19 pandemic). When you start looking at investment options, it may be a wise decision to consider including real estate in your portfolio early on. Remember to reign in the assistance of the experts to help you find the perfect property to invest in. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
Different types of home loans
In today’s economy, homebuyers often struggle to scrape together the money needed in order to buy their dream homes. Therefore, home loans have become so popular among prospective home buyers. New home loan providers noticed this and entered the mortgage lending market in order to satisfy this demand. Prospective home buyers are now spoiled for choice when it comes to choosing a provider to finance their property purchase. But that’s not all. Prospective home buyers can now choose the perfect home loan type that will be suitable for them specifically. There are several home loans available to prospective home buyers in South Africa. We will provide an overview of these types of home loans below: Fixed-rate home loan Fixed-rate home loans have a fixed interest rate for a certain period, which covers one or two years. The fixed rate will always be higher than the base home rate, but you will be protected against increasing rates. This loan helps you to avoid increased interest rates, however, if the interest rates drop, you will still be paying the same fixed rate. First-time buyers home loan First-time buyers home loans are very popular among first-time home buyers who want to invest in their first home but do not have the money at hand to put down on a deposit. Banks and other lenders are now open to lending more than 100% of the purchase price, which includes the registration and transfer costs. Variable home loan Variable home loans have their interest rate attached to the base home loan rate, which goes up and down, depending on the amount of the loan. If the home loan base rate goes down, the interest rate follows, however, it also works the other way round. Capped rate home loan Capped rate home loans provide you with the extra security of a variable interest rate without locking in a fixed rate. These home loans protect you against interest rate increases. However, it should be noted that qualifying for these types of home loans are quite difficult. Step-down home loans Step-down home loans are popular among homeowners who are close to retirement. With this type of loan, the rate offered to you by the bank is gradually lowered every year or 6 months. This saves you a lot of money. This home loan is very similar to switching home loans, as switching your home loans enables you to secure a significantly lower rate. Whichever home loan you choose, rest assured that there is a home loan out there for you that will enable you to make the biggest investment of your life; buying a home. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)