Issue 15 / April 2009
A GLASS HALF FULL
At The Bond Man, we have banished all negative thoughts!
It's been the toughest year in property for as long as I can remember, but Catherine and I are having fun!
The phones have started ringing again and we're dealing with buyers who are determined to get in on the act before the market starts its upward cycle early next year.
More than two thirds of mortgage originators have left the industry in the past twelve months. This is good news for those of us who remain, but the face of mortgage orignation has changed forever. One of the consequences of the unseemly goings on between banks and originators is that the outrageous kickbacks paid by most originators for referrals are a thing of the past. Fortunately, The Bond Man has never relied on referrals from estate agents. We obtain less than 5% of our business from them and the rest comes from our own marketing efforts and that wonderful form of free advertising called "word of mouth".
You may have noticed that originators, desperate for business, who once offered the world to buyers, have quietly removed these "freebies" from their print advertising. Estate agents, who until recently had a vested interest in "steering" the buyer towards a particular bond consultant, now have very little incentive to do so.
We have always believed in a healthy separation of functions between the estate agent and the bond consultant and in previous newsletters and magazine columns I have tried to emphasise the buyer's freedom of choice in this regard.
|PLUMMETING RATES AND THE MIRACLE OF COMPOUND INTEREST
If the repo rate comes down again on Thursday by another 100 basis points, as it is expected to do, you'll be paying R1,265 less per month on your
R500,000 bond than you were in December 2008. And if you're disciplined enough to maintain your repayments at their pre-December 2008 level instead of reducing them in line with rate cuts, you'll wipe 9 years off the term of your bond!
Dr Johan Botha, of Standard Bank's economics division, expects interest rates to drop by a further 2,5% this year, implying accumulated cuts of 5% from the top of the interest rate cycle. The effect of these accumulated rate cuts, if they materialise as predicted, will reduce your monthly repayments on a R500 000 bond from a pre-December 2008 high of R6 769 per month to R4 991 per month. Keep your repayments unchanged and you will halve the term of your 20 year bond.
Check out our Bond Calculator on The Bond Man website www.bondman.co.za
PLENTY OF WAYS TO SKIN A CAT
The recent tightening of credit policy by all banks has made it virtually impossible for first time buyers to enter the market. Depending on the purchase price, most banks now insist on a downpayment of at least 10% (and in some cases up to 15%). This has created a significant barrier to entry for those hoping to get a foothold in property, but there are still ways of obtaining 100% bonds if you're able to offer alternative forms of security.
1) Employer (Government, Telkom, etc) guarantees;
2) Cessions on Fixed Deposits (up to 100% of surrender value);
3) Life assurance policies (up to 100% of surrender value);
4) Covering bonds over other property;
5) Pension Back Loans (Pension Supported Housing Loans)
Most of you will be familiar with the first 4 forms of security, but a Pension Supported Housing Loan is an interesting one that may require some explanation. It is so named because the pension or provident fund benefit due to an employee can be used as security against the loan without eroding the retirement benefit. The amount borrowed is guaranteed against the fund - it doesn't come out of it. This means that the employee's pension or provident fund value is only affected in exceptional circumstances. Contact The Bond Man to find out more.
Two lucky readers of this newsletter will be joining THE BOND MAN at the Twelve Apostles Hotel on 26th May, for a memorable evening of remarkable storytelling. My friend Rob Caskie, the internationally acclaimed principle raconteur and historian at Fugitives' Drift, has a unique way of bringing to life the battles of Isandlwana and Rorke's Drift.
At an exclusive cocktail party, which will include welcome drinks and gourmet canapés created by renowned executive chef, Roberto de Carvelho, Rob will recount the Battle of Rorke's Drift and share epic tales of heroism and triumph of the human spirit - from both sides of the battle. He will extract important life and business lessons and show how the analysis of historical world events can be beneficial in a modern boardroom context.
In 1879 the British invaded Zululand. The central of the three major invading columns forded the Buffalo River at Rorke's Drift. Within days Lord Chelmsford's invasion was in jeopardy. Part of his central column had been almost annihilated at Isandlwana in a battle rated as one of the greatest military disasters in British colonial history. A few survivors struggled back into Natal across the mighty Buffalo River. Lieutenants Melvill and Coghill died in a gallant attempt to save the Queen's colours, earning the first posthumous Victoria Crosses in history. A great wing of the Zulu army went on to attack the British garrison at Rorke's Drift, and these warriors were beaten off in a battle that lasted all night. More VCs were awarded for valour in this battle than in any other battle in history. There never was another day like this one...
To secure your place at this event, at R195 per person, please contact Tarryn on (021) 437-9000 or e-mail .
- The first 2 readers who correctly answer the following easy multiple-choice questions, will each win 2 tickets to this memorable function.
- The next 5 correct entrants
will each receive a beautiful Bond Man pen.
HOW TO ENTER
Email firstname.lastname@example.org and enter only the number and the corresponding letter that represents the correct answer.
1. Who coined the term Standard Wank?
a) Justin Nurse
b) Martin Welz
c) Saul Geffen
2. Which side profile shot does our famously vain Reserve Bank Govenor not allow press photographers to take?
3. What is the name of the new
White House puppy?
4. Why should you entrust your bond requirements to an originator rather than simply approach your own bank?
a) The originator will shop around among several lenders to ensure that you end up with the most competitive deal
b) There is no cost to you for using the services of an originator
c) Your own bank is unlikely to offer a competitive interest rate first, but they may well bow to pressure if they know you have someone shopping around for you
d) All of the above
The Bond Man
||PROPERTY PICK OF THE MONTH
There are only 2 criteria for a property to be featured as The Bond Man's Property Pick of the Month.
The first is that I should love the property and the second is that it should represent the best value for money at the time we feature it.
No 30 Derwent Road, Gardens, in the very heart of Cape Town's City Bowl, qualifies on both counts. It comprises 4 bedrooms and 2 bathrooms (main en suite), an open-plan lounge/dining room and a newly renovated chef's kitchen, which leads onto an enclosed private patio.
The upstairs balcony, which flows from the main bedroom, affords wonderful city, bay and mountain views.
A snippet of insider info: The neighbouring property (No 32), fabulously renovated, sold last year for R3,2m.
R2 495 000
Contact Anna Gehlhaar for an appointment to view
Mobile: 072 122 9513
Telephone: +27 424 221
||LET US PRE-APPROVE YOU!
There's no point in starting your property search unless you know the bond amount for which you'll qualify.
Send a copy of your salary slip and a list of your monthly expenses to The Bond Man and we'll do the sums that will set you on your way to becoming a property owner!
Telephone: +27 21 439 0741
Fax: 0866 9033 04
Mobile: +27 (0) 82 453 7374
45A Joubert Road