Offer to purchase question

[Steamy Tom]

Depends on your circumstances. I’m actually paying off a 20 year bond under a 7 year term. Since I used my folks flexi homeloan. We can still afford the payments. Would free up allot of my cashflow though.

it is honestly not worth it, your repayment difference will be less than R1000 on a R1m loan per month but your total interest almost doubles

 

[beefymoocow]

it is honestly not worth it, your repayment difference will be less than R1000 on a R1m loan per month but your total interest almost doubles

I did a calc. I need to pay around 11k a month on a 650k loan with 80+ months remaining.

If I can get an extension of 10 years the repayment will drop to around 5k. And the interest is prime minus 1.8.

 

[Steamy Tom]

I did a calc. I need to pay around 11k a month on a 650k loan with 80+ months remaining.

If I can get an extension of 10 years the repayment will drop to around 5k. And the interest is prime minus 1.8.

I assume you mean the extension then makes it 200 months...on that maths it does seem to not be that bad of a difference, suspectly so actually...also bear in mind the interest rate is going to go back up

 

[beefymoocow]

I assume you mean the extension then makes it 200 months...on that maths it does seem to not be that bad of a difference, suspectly so actually...also bear in mind the interest rate is going to go back up

Yea but initially saved allot more when I used my folks paid up bond to purchase my property. Got a nice cash discount on a property plus saved allot on bond fees etc. so don’t mind paying alittle extra in interest.

 

[TheBadMadMan]

FYI these are the milestones that are being tracked by my transferring attorneys (from the buyers perspective).

 

[Gozado]

Yea but initially saved allot more when I used my folks paid up bond to purchase my property. Got a nice cash discount on a property plus saved allot on bond fees etc. so don’t mind paying alittle extra in interest.

Could you please explain how this worked, and what you, and what your parents, had to do? Is the property you have bought actually in your parents' names?

 

[LlamaParty]

Another random tip. If you're getting home insurance through the bank, rather than your own broker, make sure you bargain on the price. My insurance quote miraculously went from R580 to R350 after I mentioned that I was getting quotes from my current broker.

 

[Whiskers81]

Another random tip. If you're getting home insurance through the bank, rather than your own broker, make sure you bargain on the price. My insurance quote miraculously went from R580 to R350 after I mentioned that I was getting quotes from my current broker.

I got my building insurance with my home content and motor vehicle insurer otherwise, when you have claims you have to pay two separate excesses when you claim. one for building and one for content/vehicle. I find it easier to deal with the Insurer I have been with for 17 years

 

[beefymoocow]

Could you please explain how this worked, and what you, and what your parents, had to do? Is the property you have bought actually in your parents' names?

They just had a flexi loan. When my folks retired. They settled the homeloan with their retirement but kept the facility open. When I purchased my first property I withdrew the funds and bought the property in cash. The only issue is that there was about 8 years left on the term of the homeloan. So I have to pay off the whole balance within 8 years.

 

[cguy]

They just had a flexi loan. When my folks retired. They settled the homeloan with their retirement but kept the facility open. When I purchased my first property I withdrew the funds and bought the property in cash. The only issue is that there was about 8 years left on the term of the homeloan. So I have to pay off the whole balance within 8 years.

So, you're paying off your house with money withdrawn from your parents home loan? Isn't that subject to gift tax?

 

[Speedster]

So, you're paying off your house with money withdrawn from your parents home loan? Isn't that subject to gift tax?

Not if he has a loan agreement with his parents and they've just loaned him their funds.

 

[beefymoocow]

Not if he has a loan agreement with his parents and they've just loaned him their funds.

Yep. It’s an actual loan agreement. In fact you get the same deduction as a normal home loan since it’s used for rentals.

 

[beefymoocow]

So, you're paying off your house with money withdrawn from your parents home loan? Isn't that subject to gift tax?

Yea. Well I have paid off my house. I’m just paying back my parents homeloan.

 

[TheBadMadMan]

Damn, all this talk about mom/dad money...Wish I was that privileged.

 

[beefymoocow]

Damn, all this talk about mom/dad money...Wish I was that privileged.

Depending on perspective/circumstances you can apply this method to help your folks. If you studied tax or have some knowledge in tax. You can structure a deal where you borrow from parents/relatives but pay them interest. But obviously it needs to be at a fair/market rate. You can get a nice deduction on the interest payments and your folks can get a nice interest income at a higher interest compared to a cash deposit rate. And if their interest income isn’t that high, your folks won’t have to pay tax on the interest earned from the loan.

Again wouldn’t suggest doing this if you don’t have experience or without expert advice. Your documentation needs to be on point if Sars come knocking.

 

[TheBadMadMan]

Depending on perspective/circumstances you can apply this method to help your folks. If you studied tax or have some knowledge in tax. You can structure a deal where you borrow from parents/relatives but pay them interest. But obviously it needs to be at a fair/market rate. You can get a nice deduction on the interest payments and your folks can get a nice interest income at a higher interest compared to a cash deposit rate. And if their interest income isn’t that high, your folks won’t have to pay tax on the interest earned from the loan.

Again wouldn’t suggest doing this if you don’t have experience or without expert advice. Your documentation needs to be on point if Sars come knocking.

Sounds solid, no doubt. One problem though, my mom is piss poor and financially stupid.


Don't get me wrong, i have no need for any family money at this point in my life. However that's not saying it would have made my life a lot easier growing up and finding my feet that's for sure.

 

[Borrels]

I got my building insurance with my home content and motor vehicle insurer otherwise, when you have claims you have to pay two separate excesses when you claim. one for building and one for content/vehicle. I find it easier to deal with the Insurer I have been with for 17 years

True but also consider that you will lose you OutBonus or similar benefits if you claim any item on your policy. I separated my building + content from vehicles for that reason. Chances are slim that all will be claimed in single event. Either way, best to keep all your risk with one insurer as you will most likely get the best rates

 

[Whiskers81]

True but also consider that you will lose you OutBonus or similar benefits if you claim any item on your policy. I separated my building + content from vehicles for that reason. Chances are slim that all will be claimed in single event. Either way, best to keep all your risk with one insurer as you will most likely get the best rates

Correct, but my current insurer doesn't do "outbonuses". Lighting strikes are one event that does come to mind that will require claims for building and / or content. Burst geyser / water damage.

 

[Zenbaas]

Just be aware the the inspection report has no guarantees... I've seen reports that missed fundamental issues with houses before, and the new owner can do nothing against the inspection company...

Absolutely 100% true. Went through this from Jan this year on two fronts. They didn't pick up the electrical installation wasn't even close to compliant (long story but COC is basically fake/non valid). Number two they didn't pick up the boundary wall had many issues and wasn't according to spec or regulations. Point in case is the wall fell over a month after we moved in and insurance repudiated the claim etc etc. Inspection company just threw their hands in the air. (inspect-a-home) in this case.

Massive expenses incurred by us in the last few months.

 

[APoc184]

Here comes another stupid question.

So Property Insurance is sorted. Our broker is 40% cheaper than Outsurance who was recommended by FNB on the bond approval quote. (Might still play them off against each other but I prefer keeping everything with one broker)

As for Life Insurance. Still need to get an official quote from FNB Life as indicated by Bond approval quote.

Credit Life Insurance Clause in quote states:

Unless specifically stated in the special terms and conditions of this
quotation, a credit life insurance policy is required for the duration of
the Agreement. Such credit life insurance must, at a minimum, cover
the Customer's total outstanding obligations in the event of the
Customer's death or permanent disability, and 12 (twelve) months
repayment amounts cover in the event of the Customer's temporary
disability, occupational disability and unemployment or inability to
earn an income, where the Customer/s qualifies for such benefits
and in line with applicable legislation.

It then goes on to quote an estimated monthly premium of R1700 for such cover. Seems a bit steep to me.

Question 1: Because wife and I are joint buyers, do we both need to have Insurance for the "Total Outstanding Obligations"? Or only myself as the debit order and payments will be coming from my side.
Question 2: Can I use a Life Insurance provider of my choice if it meets the criteria of the bank and the bank is named as a party of interest.