Home Loan dilemma

alf101 said:
I am eyeing one that's maybe R100 000 too much for me.

As long as you know you can get through the 1st 2 years ok, you'll normally be fine.
But that means cutting down on a few nice things and paying extra into your bond every month.
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Yes, I have already told my girlfriend. No xmas, birthday gifts for a long time. Sit at home and enjoy them salticracks.
 
xrapidx said:
Apparently you must have been there when I purchased the place, you seem to know quite a bit about? The sellers sold at the first price I gave them - they were desperate and buggering off out of SA. It was valued at only R1.95 by the bank - a private assessor valued it at R2.1m - and considering current markets - it hasn't changed.
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Sounds like you got a really good deal then. ;) A friend of mine also had to sell under conditions like that. 2008 recession + plane tickets to NZ = half a mil below what is reasonable. Ouch.

xrapidx said:
and purchase price != value... unless you're living under a rock, its way more expensive to build now. With the current market, most sales the replacement cost of the building does not equal the purchase price.
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Perhaps our ideas of "value" differ. I used it above as fair value or open market value (same thing). If you understand it as cost to rebuild then thats cool too, in which case I'd agree purchase price != value.

As you said building is way more expensive. ~20-50% more. Insurance won't pay out enough to rebuild it though - only enough to purchase a similar asset in the open market.
 
Not so much anymore..

Now they insist on the insurance value being the value to rebuild the property to what it was, so its always insured about its "market" value.
 
HavocXphere said:
As you said building is way more expensive. ~20-50% more. Insurance won't pay out enough to rebuild it though - only enough to purchase a similar asset in the open market.
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No they won't - they will pay what it costs to put your house back where it was - its the whole point of being making - you insure for what it would cost to put your house back like it was if it got wiped out.

And as per the link above - if you have a house which sells for R40,000,000 because of where it is, you're hardly going to insure it for that if it'll only cost R20,000,000 to rebuild it.
 
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Eish another thing to add to the confusion... The value of the land.
So if you paid 1mil the buildings are maybe worth 800k (market value) and the land 200k. Surely then you'd need to insure for 800k?
I paid 8xx for my place and then took out a bond about a year later and they said it has to be insured for 1.6m+. Granted the seller was desperate and the place was dirty as hell but we tidied it up, had a gardener come in etc so it wasn't quite so shocking.
 
When I spoke to the bank they said the property itself doesn't need to be insured - because it'll still be there if your house explodes.

Obviously things like walls, fences, etc need to be covered.
 
Eish, either way. They sent out an assessor (for the bond), then told me insure for x so I did. They can't exactly argue about the value now can they?
I had a burglary this year and an assessor came out and they didn't have any queries/problems. There was damage to the property so they would have assessed the property value in relation to what it was insured for.
Also, for the contents that were stolen (like an old ass xbox 360 from when they first came out a few years ago) I got brand new equivalents as replacements, not a cash payout of what the market value of that item was (in the case of the xbox maybe R500). Even taking the excess into account you could say I kinda scored out of that deal. I did immediately spend a whole lot more on security though and obviously still had to pay the excess so it wasn't a cheap exercise but I got some stuff that was newer than what I had.
 
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