Whatever property you choose to invest in, your choice doesn’t stop there! You also have the power to decide what loan you are going to employ to pay for your investment. Investors need to realize that the banks aren’t doing them a favour by granting them a loan – it’s their business to give loans, you can choose to do business with them, or not.
Naturally we’re assuming that you’re in the financial position to qualify for a loan – and if you are, then the banks and financial institutions want your business.
Traditionally, people are of the opinion that they need to eliminate debt as much as possible. However in regard to property investments, the “debt” can be used to your advantage if handled correctly. To start with, trying to pay off a mortgage in as short a time as possible might not be the best strategy to follow. And likewise, having a large loan on a prestigious property might also not be the best for you.
One of the key factors you will need to consider is that of affordability. By this I mean can you afford the repayments. Your circumstances might qualify you to purchase property “A” but the reality of how you use your resources might make getting that property an uphill battle when it comes to monthly bond instalments.
When contemplating the long term commitment of monthly bond repayments it is wise to take stock of your present situation and how it is likely to develop over the coming years in respect of your monthly obligations. Experts advise buyers to rather aim a little lower in their affordability expectations in order to allow some room to manoeuvre financially if the need arises instead of buying at the upper limit of what they can manage to pay each month.
But careful planning can result in you getting the place you want by lengthening the repayment period. Of course this means that you will pay more in total interest over the term, but from the monthly affordability point of view it could be just what you need. And as time passes, the flexibility of the loan you have negotiated means that you could pay more into your loan when you can afford it and thereby reduce the total interest bill.
Don’t be limited by feeling that you have to use your bank to finance your property investment. There are a host of banks and finance companies who want your business and they will gladly tailor-make a plan that will suit your needs as well keep them satisfied. By entering the property market as an owner you put yourself in the powerful position of being able to negotiate the best plan that will suit your needs perfectly.
Contact us at IGrow Wealth Investments – my team and I will help you on the road to achieving the success you deserve.
Discover how to build your wealth with property investment Get free training videos & resources on the secrets of property investment in South Africa. Fill out the form below to gain instant access to our training resources.