Finance

How to Save Money on Property

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For those interested in the property market, there’s a lot to think about, and they need to consider how much money they can afford for a deposit and how much they are willing to spend on their mortgage.

But buying your first investment property doesn’t have to start at the top end of the market. It is preferable to begin slowly and work your way up. It’s all about deciding where you want to be in ten years, looking ahead, and planning accordingly. Finding deals on real estate property is an art. This guide will take you through the best ways to save money on the property you buy.

Understand the Price Trends

If home prices have increased steadily over the past few years, it may be worth waiting until prices drop before buying a new home. If prices are on the decline, then now could be an excellent time to purchase. By understanding what happens with home prices in your area, you’ll be able to decide whether or not now is a good time to buy real estate and how much you should offer on any given property.

Access Cheaper Financing

Obtaining cheaper financing is one way to cut costs. This can be accomplished by taking out a smaller loan and making a larger down payment. For example, if you have R1760000 in liquid assets and are looking at purchasing a property for R3522942, it may be better to put down 10 percent instead of 5 percent. This will reduce your monthly mortgage payments and give you more equity in your home.

Another way to reduce costs is by refinancing into a lower mortgage interest once your home has appreciated.

Reduce the Acquisition Leverage

The more you pay for a home, the more interest you have to pay over the life of your mortgage. To reduce your acquisition leverage, try not to exceed 80% of the purchase price when buying a home; if you’re buying a R5284413 house with a 20% down payment (R1056882.60), that leaves R4227530.40 that needs financing. It will make a big difference if you can take out a mortgage for no more than R 4227530.40 instead of R4403677.50 or even R4844045.25.

Know the Right Time to Buy a Property.

You must buy at the right time, even if you’re looking at an investment opportunity.

If you want to ensure that your investment will pay off, you must avoid buying something simply because it looks good or because everyone else is doing it.

Instead, look at all the factors involved before deciding whether or not to invest in a particular piece of real estate. This includes things like location, price, and more.

Negotiate Your Contract

Negotiation is the most effective way to save money on the house. You can negotiate anything from the price of a house to closing costs and even the type of repairs that will be made after the sale.

If you have time, try to negotiate a lower price before making an offer. If you don’t have time or the seller won’t budge on their asking price, you can still try negotiating other aspects of the deal. For example, find out how much they paid for utilities in the past 12 months and offer to pay that amount instead. Or ask them to pay all closing costs or give them a bigger down payment than they’re asking for.

You can also negotiate repairs with your home inspection report in hand. If problems with your new home need immediate attention, such as plumbing leaks or roof damage, talk with the seller about fixing them before closing. This way, you won’t have to pay for these repairs out of pocket after buying your new property.

Use a Subsidy

A subsidy is an allowance from your employer that helps you pay for the cost of your house.

There are many ways to subsidize your payments, but they all have one thing in common: they make your monthly payments more affordable.

For example, some companies will offer employees free money toward their mortgage payments or other housing costs as part of their benefits package. Other companies may give employees a certain amount of money each month toward their rent or mortgage payments (that they don’t have to pay back). Some employers even offer financial assistance to employees who move to help them buy or rent a home in another state or city.

Use a Buy-Side Agent.

A buyer’s agent is the equivalent of a listing agent who only represents the buyer. This means the buyer can negotiate a better closing price because the buyer’s agent has his interest at heart.

Buyer’s agents don’t get paid until you’ve found a place and made an offer that the seller accepts — so they have an incentive to negotiate on your behalf.

Buyer agents typically charge anywhere from 1% to 3% of the total sale price of your new home (as opposed to 5% or more for sellers’ agents).

Here are a few tips for using a buy-side agent:

●      Don’t let your agent rush you into making an offer before you’re ready. Just because someone else has made an offer doesn’t mean that yours is less likely to succeed.

●      Be prepared to make an offer on any property you like, even if it’s not listed with your realtor. You can always show it to her later if you decide it’s worth pursuing.

●      Get multiple estimates on inspections and repairs before making an offer on a property.

It’s important to ensure the house needs significant work, as it could cost thousands of dollars more than the seller estimated. That amount could add up quickly over time.

Scrape Historic Data

Although scanning documents, record tapes, or other media sources may seem like a hassle, historical data can be invaluable when selling your house.

For example, someone might find out that his home was located in an area where prices rose by as much as 200 percent in the past ten years. That information could help him determine what price tag would attract buyers today.

Check “True” Affordability.

Before you buy a home, ensure you can afford it. Calculating your debt-to-income ratio (DTI) is a great way to do this. Your DTI is calculated by dividing total monthly debt obligations by gross income. For example, if your monthly mortgage payment is R17614.71 and your gross income is R70458.84, then your DTI would be 25 percent (R17614.71/R70458.84 = 0.25). If your DTI exceeds 35 percent (usually considered “unstable”), then it’s probably best not to buy a house right now.

Conclusion

If you’re looking for a property, be sure to arm yourself with all the information and facts about it. The tips above all help ensure that you’ll have no problem getting a bargain when it comes time for you to negotiate on a property.

 

 

 

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