| Getting on the first rung of the property
ladder |
The old adage that property ownership leads to financial prosperity
still holds true - but stricter credit legislation, coupled with
high house prices, has made it more difficult for young buyers to
gain a toehold in the property market.
One of the first decisions young people who start a job have to
make is where to live. And most of them will realise their only
immediate option is to rent accommodation because it is unlikely
they will be able to afford property of their own.
But there are ways in which young people can work towards this
goal and put themselves on the path to future prosperity. In the
first instance they should approach a bank or mortgage originator
to find out what size bond they qualify for, based on salary and
financial commitments such as clothes accounts or car repayments.
In most cases the news is unlikely to be encouraging, but it will
give them an idea of what price range they should target for a first
property.
They should then take steps to improve their credit rating by reducing
financial commitments and making sure that they maintain a good
credit record. A savings account into which monthly deposits are
made will not only help to accumulate a down payment on a property
but also demonstrate financial discipline.
Realism is another necessary ingredient. It is not a good idea
to delay buying just because you cannot afford a luxury home at
first. It is a better option by far to buy a modest property and
build up some equity - in other words, wait for the value to increase
- before selling again and using some of the gains on a property
closer to your dreams.
And if the only property you can afford is far away from where
you need to live because of where you work, it is still an option.
Such property can be let to tenants, who will help pay off the bond,
while you continue renting yourself in the interim. Once the value
of the purchased property has grown sufficiently, it can be resold
and the proceeds used to buy a home for your own use.
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| How to answer the call of the country |
Stressed urbanites are increasingly succumbing to the allure of
a country lifestyle.
Of course not everyone is lucky enough to escape to the country
permanently for the simple reason that their jobs keep them city-bound.
Still, there are always weekends and holidays - and a simple country
retreat may sound like a sanity saver, especially if you own it
and don't have to depend on its availability.
On top of this, it may be a shrewd financial investment. If you
decide the time and to buy a country property, here are a few tips
to get you started:
- Decide what type of country scene appeals to you - mountains,
beaches, riverside, farmland, bush or forest - and pinpoint a
feasible area that you can comfortably reach for a short breakaway.
The closer to your permanent residence, the better the chances
that you will be able to escape more often;
- Take time off to go and scout a few areas. Drive around to
get a feel for each one and to make sure reality fits your dreams;
- Once you've decided on an area, subscribe to the local newspaper
to gauge property prices and to get a feel for local issues and
community values;
- Approach a reputable local estate agent to help you narrow
down your search. A local agent's help can be invaluable since
they are on the spot and can alert you when suitable property
comes on to the market. Be prepared to make time to go and promptly
view property recommended by your agent;
- Be patient and take your time. By their very nature, country
properties may come to market at longer intervals than city property.
But that does not mean you should not enjoy the search!
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The temptation to start improving your new home
the minute you have unpacked the last box may prove overwhelming.
But a bit of restraint may save new homeowners
a lot of needless work and a considerable sum of money for the simple
reason that people who act in haste often repent at leisure.
For instance, most people like to repaint at least
the interior of their new home before or soon after moving in. If,
however, you repaint before you discover that you really cannot
do without additional wall plugs or that the kitchen plumbing needs
to be replaced, changes are high that you will have to repaint or
live with a patchy paint job.
And there is no better way to discover what really
needs to be done than to live in a house for a while. Chances are
good that your initial list of improvements will have changed remarkably
after living in your new house for a few months.
A good plan of action is to list all the improvements
you would like to make and then prioritise projects based on cost
and urgency. More expensive projects - those requiring professional
help - can be put on a wish list and handled as finances allow,
while cosmetic changes should be tackled only after due attention
to structural improvements or renovation. It is an expensive exercise
to lay new carpets only to have them ruined after the first summer
storm because the roof is leaking badly.
Renovation also becomes more manageable when projects
are tackled room by room. It causes less disruption to your household
and makes it easier - and more satisfying - to track progress.
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If you like to follow your own lead, think carefully
before buying property in complexes where a body corporate or a
homeowners' association (HOA) makes the decisions.
Sectional title schemes are usually governed by
a body corporate that enforces standards and rules, while cluster
villages and estates are generally governed by an HOA.
And while homes in such secure complexes may enable
you to live a lock-up-and-go lifestyle and be free of many maintenance
chores, it does also mean that somebody else will always have a
say in what you may do to the exterior of your home, for example,
or just how the levies you pay will be spent.
So if you have any qualms about leaving such decisions
to others, you should do your homework thoroughly before taking
the leap.
- Get a copy of the body corporate or HOA's rules and make sure
you understand them - once you buy a unit, you enter into a contract
that you will abide by the rules. Potential conflicts may include
restrictions on the size, type and number of pets; exterior fixtures
such as antennas, clotheslines, and flags; fence types and the
colour of paint; and whether home-based businesses are permissible;
- Ask what the monthly levies or contributions will cover and
establish how often levies are increased;
- Ascertain that there is an adequate reserve fund to meet unexpected
expenses - without such a fund there is a real danger that your
property value may be affected if unforeseen repairs cannot be
made due to lack of funds; and
- Ask for the minutes of recent meetings and the latest financial
statement. If these are unavailable, think twice before committing
yourself.
In short, you need to be very clear that you are
comfortable trading off the freedom to make all your own decisions
regarding your property for the convenience of having someone else
maintain the property and oversee security.
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