Offer to purchase question

A friend wants to buy a property for about R400K and has about half of it to pay upfront. What would be the best strategy to minimize interest on a home loan. Get a 20 years home loan, pay 200k lump sum?
 
mr_smithh said:
A friend wants to buy a property for about R400K and has about half of it to pay upfront. What would be the best strategy to minimize interest on a home loan. Get a 20 years home loan, pay 200k lump sum?
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Whatever convinces the bank to give them the best rate. I reckon a big deposit will help convince the bank to give a better rate, but not sure how it works in the R200k ballpark.
 
mr_smithh said:
A friend wants to buy a property for about R400K and has about half of it to pay upfront. What would be the best strategy to minimize interest on a home loan. Get a 20 years home loan, pay 200k lump sum?
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10-20% deposit of the asking price is usually the sweet spot for a good interest rate, more that leads to diminishing returns IMO.

Where does your friend find a property for R400K?
 
mr_smithh said:
Thanks, my thoughts exactly.
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The thing or rule related to deposits, its actually very simple, the more you put down, the more you cant use for the future.

Let me explain, the power of a bond is within the flexi facility (which means you can regear and re-use it if needed).

Lets say you buy a place of R1mil, and put R300 000 down, your bond is R700 000. If you want to reuse that ever again, and its paid off, you can only use up to the registered amount (which is R700 000).

If you have a bigger deposit than 10%, only put down 10%, and once registered, put the other in. That will have the same effect as a bigger deposit and you will use it better future wise

Hope it all makes sense
 
zerocool2009 said:
The thing or rule related to deposits, its actually very simple, the more you put down, the more you cant use for the future.

Let me explain, the power of a bond is within the flexi facility (which means you can regear and re-use it if needed).

Lets say you buy a place of R1mil, and put R300 000 down, your bond is R700 000. If you want to reuse that ever again, and its paid off, you can only use up to the registered amount (which is R700 000).

If you have a bigger deposit than 10%, only put down 10%, and once registered, put the other in. That will have the same effect as a bigger deposit and you will use it better future wise

Hope it all makes sense
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Good advise
 
I like a house, but it needs a bit of work, and I want to offer quite a bit lower than asking. Is it okay to discuss my offer with an agent before going through the paperwork of the offer, to see if the seller is likely to accept?

I don't want to waste my time offering if they will just reject it.
 
derp90 said:
I like a house, but it needs a bit of work, and I want to offer quite a bit lower than asking. Is it okay to discuss my offer with an agent before going through the paperwork of the offer, to see if the seller is likely to accept?

I don't want to waste my time offering if they will just reject it.
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you can, they might know what the seller realistically is expecting but a lot of the time they will prob give you "a lot to consider" yada yada, however they might know previously rejected offers which might give an indication, though circumstances change. Completing an offer isn't a lot of paper work, will take you 20 mins, they are obligated to submit it, just do it.
 
derp90 said:
I like a house, but it needs a bit of work, and I want to offer quite a bit lower than asking. Is it okay to discuss my offer with an agent before going through the paperwork of the offer, to see if the seller is likely to accept?

I don't want to waste my time offering if they will just reject it.
Click to expand...
Sort out your OTP template now while you still have time. So when you do come accross a house you want to buy you just have to change a few things, sign and give it to the Agent. If the agent refuses to present your low ball offer, firstly tell them they are obligated to present it to the seller, but also print the OTP yourself and go drop it in the post box of the seller or courier it to them if you really want to ensure they get it.
 
derp90 said:
I like a house, but it needs a bit of work, and I want to offer quite a bit lower than asking. Is it okay to discuss my offer with an agent before going through the paperwork of the offer, to see if the seller is likely to accept?

I don't want to waste my time offering if they will just reject it.
Click to expand...

Submit your offer with what you think is fair. You can chat to the agent but he/she will always try push you higher. The agent has to present the offer to the owner.
 
derp90 said:
I like a house, but it needs a bit of work, and I want to offer quite a bit lower than asking. Is it okay to discuss my offer with an agent before going through the paperwork of the offer, to see if the seller is likely to accept?

I don't want to waste my time offering if they will just reject it.
Click to expand...

If you like the house, see what it was bought for online, complete an OTP and submit. And dont "over commit yourself". The agent's work is to present your offer, and the seller must do his sums as he needs to pay the agent as well if the agrees.

Good luck
 
Thanks all, I'd need to go see the house again, only thing putting me off is low ceilings
 
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