Property resolutions for 2019
Category Advice
It's that time of year when, whether you love it or hate it, conversation around the braai invariably turns to resolutions and what yours are for the next year. Losing weight and going on more adventures is your prerogative, but we do have some suggestions for property resolutions that are definitely worth making, and are fairly easy to stick to. What's more, they're the kind of things that your future (financially independent) self will certainly high-five you for.
Here are Leapfrog's top five property resolutions for 2019:
Pay more than the minimum into your bond
Strictly speaking, a property only really becomes an asset when it is paid off. Just because the bank has given you a 20-year bond, or even 25 years, doesn't mean you should take 20 years to pay off your property.
"The faster you pay off your bond, the sooner you have leverage that asset and income to diversify your property portfolio by acquiring more, or build up an emergency fund in your bond account," recommends Elmarie Bester, principal at Leapfrog Faerie Glen.
She says that it is a good idea to get into the habit of making additional payments whenever you can. "As little as R500 a month extra could shorten your bond period by a couple of years," Bester adds.
If you need motivation for making extra payments into your bond, consider the following comparative table:
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R1 million bond at 10%, payable over 20 years |
|
|
Monthly repayment = R10 000 |
Monthly repayment = R10 500 |
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Total loan amount = R2 159 055 |
Total loan amount = R 1 996 794 |
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Total loan term = 17.99 years |
Total loan term = 15.85 years |
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Total interest R1 159 055 |
Total interest = R996 794 |
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Difference in interest R500 a month makes = R162 262 |
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Negotiate a better interest rate on your bond
One of the fundamental factors determining the favourability of a bond is the interest rate that it is tied to. But the good news is that that interest rate needn't be fixed for the full loan period.
"The goal is always to get the lowest interest rate possible and often the best way to do this is to shop around. If you already have a bond there is no rule that prohibits you from moving that bond to an institution that can offer you a better interest rate. But you may incur costs for cancelling your existing bond, so be sure to take that into consideration as a possible expense" Bester advises.
Cutting down on interest is how you save the most money over time. "Even a 1% difference in the interest rate can save you thousands over the long term," Bester adds.
There is some paperwork involved in moving your bond (subject to approval) to an institution that can offer you a better interest rate, but definitely worth the effort when you consider the savings.
Prioritise property maintenance
Property maintenance has a direct impact on property value and growth. "A well-maintained property always fetches a higher price of the market because of its superior value," Bester says.
Maintenance doesn't mean reconstruction or engineering, but is rather about keeping your hand on the little things - fixing things when they break, replacing fittings that are old or outdated, painting the interior and exterior every couple of years, looking after the garden and making sure the plumbing and electrics is in safe working order.
"Property maintenance becomes easier, and more "natural", when you adopt a houseproud mindset. Tell yourself that the little things become the deciding factors on value later on, Bester advises.
Doing some improvements regularly, and not allowing a small niggle to make a maintenance nightmare is probably the smartest, most cost-effective way to go about it.
Ask a trusted property advisor for an evaluation
Make a point of getting your property evaluated regularly. "Most property evaluations will be a done free of charge by a trusted property advisor in your area and it takes no more than one hour of your time," Bester explains.
The evaluation will give you a market-related value for your property, comparable to other properties in the area. It also gives the property owner a useful indication of what can be improved to increase the value.
"Moreover, a property evaluation is an interesting way to see how your investment has performed," Bester says.
Say hello to your neighbours
Everybody wants to live in a friendly neighbourhood, and friendliness starts by being friendly. If you don't know your immediate neighbours, make it your mission to go around and introduce yourself. And stop for a chat when you see them outside.
"Properties in neighbourhoods where the people are friendly and look out for each other are very desirable. Good neighbours make strong communities and communities help make us resilient and feel part of something bigger than ourselves," Bester believes.
Start by waving and chatting, but there's no reason to not take it further and organise a street braai!
Author: Leapfrog Property Group
