Financial help

[Fatboydrunk]

Hi
If anyone can give me some advice it would be great.

I currently have 2 loans which I payback in total R6500 a month for the next 5 years.
I also owe about R80k on a credit card.

I own a bond free property worth about R2m.

Is there a way I can pay off my loans and CC using my property.
Or could I buy a new property and get a bond for more than the property is worth to pay off the loans.

Thanks in advance.

FBD

 

[Greg C]

Hi
If anyone can give me some advice it would be great.

I currently have 2 loans which I payback in total R6500 a month for the next 5 years.
I also owe about R80k on a credit card.

I own a bond free property worth about R2m.

Is there a way I can pay off my loans and CC using my property.
Or could I buy a new property and get a bond for more than the property is worth to pay off the loans.

Thanks in advance.

FBD

You can actually do either of your proposed possibilities. Neither of which are particularly efficient. Let me be more specific

Unbonded property - raise funds: Here you would need to effectively register a bond. You will not get full value for registered bond/market value generally. I work for the banks likely at a push between 80-90% especially as its not a new buy but rather an existing property. You will then pay registration and legal costs to register the bond - depending on attorney and value of property and you haven't even got the payout yet. If you do however go this route, and you are able to achieve an access facility, you have access to a much cheaper source of credit. My advice would be to register the bond to around half of property value or to the equivalent of the debt you would like to pay off

Buying another property has no efficiency whatso ever unless returns of the new property and surplus funding not only pays the debt, pays for the registration costs and the returns of the rentals (assuming you don't live there ) is exceedingly good

Total advice if you don't have money for registration costs of a bond, go the debt consolidation route through your bank and attempt to negotiate the rates. But both credit cards and personal loans attract a classic 17% general interest rate so very much doubt you will be able to reduce that unless you are a king somewhere we aren't aware of (No offense). If you can, and have a little bit of savings, register on the unbounded but ensure there is an access facility repay the debt and save on repayments and plow money back into the bond and money spent for registration long term over a 5 year period you would have significantly saved

Good luck

 

[IziWhatNow]

I don't think your solution out of the debt problem should include financing a property. Instead, these sort of things many times require a behavioural change (I'm assuming in your case too).

I suggest you follow an approach like Dave Ramsey's Debt Snowball

Pay minimum payments on all of the debts except the smallest one then attack that debt with a vengeance. We're talking gazelle intense, sell-out, get-this-thing-out-of-my-life-forever energy. Once it’s gone, take the money you were putting toward that debt, plus any extra money you find, and attack the next debt on the list. Once it’s gone, take that combined payment and go to the next debt. Knock them out one by one.

 

[Greg C]

I don't think your solution out of the debt problem should include financing a property. Instead, these sort of things many times require a behavioural change (I'm assuming in your case too).

I suggest you follow an approach like Dave Ramsey's Debt Snowball

You are spot on Pakka, the issue if using what can. At the end of the day advise is up to the person with info at hand. Definitely a change of behaviour but a solution needs be made on what the client currently has on hand and available and going to to address behaviour issues. Either way I do hope you come right

 

[Ecco]

Hi
If anyone can give me some advice it would be great.

I currently have 2 loans which I payback in total R6500 a month for the next 5 years.
I also owe about R80k on a credit card.

I own a bond free property worth about R2m.

Is there a way I can pay off my loans and CC using my property.
Or could I buy a new property and get a bond for more than the property is worth to pay off the loans.

Thanks in advance.

FBD

You did not mention if you having difficulty paying the R6500 per month or not.

Debt is debt whether it is on the house or for the two other loans. If you can afford to pay the R6500 per month, just keep going till its paid.

By bonding your house (I assume for 20 years) you may make your monthly payment smaller then R6500 per month, but you will pay more in the long run.

Maybe see how you can settle the credit card.

 

[Thor]

snip

Wow, I learned something new. rep incoming

 

[Messugga]

You did not mention if you having difficulty paying the R6500 per month or not.

Debt is debt whether it is on the house or for the two other loans. If you can afford to pay the R6500 per month, just keep going till its paid.

By bonding your house (I assume for 20 years) you may make your monthly payment smaller then R6500 per month, but you will pay more in the long run.

Maybe see how you can settle the credit card.

The reason one may choose to go for something like this is because you're likely to get a better interest rate on a bond than on a credit card, for example.

Is it worth setting up a new bond on a property? Depends on the total debt, but I doubt it'll be worth it in this case, with the associated costs of bonding a property.

 

[Greg C]

Wow, I learned something new. rep incoming

Hehe Not sure if this is a good thing