Your Current House Has Money In It

This blog is meant to awaken you to “where the money is”.

You may feel in despair that you cannot possibly begin a property investment portfolio, your salary and debt repayments are choking your investment dream.

You may be oblivious to the fact that- having paid a mortgage for a few years has given you some access to capital that can be utilised to begin a property investment portfolio.

Whenever we speak about a house being an “asset”- It REALLY is. Here are a few examples of why a house is an asset:

• You can hide excess savings in a house
• One can get tax-savings through their mortgage
• One can save on interest by paying extra on the mortgage.

Having said that- we at SHARE YOUR WEALTH are about educating and enabling you to kick start your property investment portfolio.

I am even tempted to boldly state that: “There is no value in paying off your bond- if you don’t use the equity sitting in of that mortgage”

Here are the various ways you can utilise your existing bond, to begin an investment portfolio

Access Bond:

• When you have “access” to money in your current mortgage. If you have paid 500 000 on a bond of R1000 000. You can actually access that R500 000 for house improvement (force appreciation on that house, can be resold at a higher value)OR buy an apartment for investment.

Re-Finance:

•  This is commonly done. . If you have paid 500 000 on a bond of R1000 000. You can re-finance, by withdrawing the R500 000. The bank will register a new R500 000 mortgage, it gets registered at Deeds Office, some legal fees are payable. A new interest rate is calculated. Now you have TWO separate mortgages. You can put down a deposit on another property- collect rent and pay this new bond.
• In another common transaction. When you have a paid-up mortgage. Or you inherit your parent’s house that has no mortgage. OR you buy an apartment for cash. You can get a Real Estate Professional to help you evaluate the house. You can then ask the bank to “finance” the property- use that cash to buy a new property and grow your portfolio.

Re-advance:

• When a bank has granted a mortgage of R1 200 000, but you buy a house for R1000 000. After paying R100 000, you can go back and ask the bank to re-advance the loan that is sitting at R900 000 to R1-million, so you can access it to borrow the R100 000. The bank will re-calculate the new loan and new interest. No legal fees required.

Restructure your home loan:

• You can go to the bank and re-arrange your repayment and even re-negotiate your interest rate. So, you can pay less, and have an extra R500- R1000 for saving towards your investment portfolio

The BLOG-POST is obviously a snapshot of what is possible. For you to take action- you would require to speak to a smart Bond Originator/ Your local municipality office, Real Estate Professional or even a Conveyancer and the mortgage section of the bank. Do not be satisfied with a NO. My experience has been that- most of the above professionals may not be familiar with the terms and will tell you that it is not possible.