select
|

I’ve just bought a home and now I’m being transferred – what do I do?

It’s a common piece of advice for buyers, but it’s not very useful when life doesn’t stick to the plan. What do you do when you’ve just bought a home and you find yourself being unexpectedly transferred to another city, country, or even continent? Should you kiss your investment – and all the money spent acquiring it – goodbye? Or are there better options that won’t leave your finances in quite the same mess?

“It’s a tough situation,” says Bill Rawson, chairman of the Rawson Property Group, “and certainly not ideal from a stress point of view. A lot of people in this predicament do choose to sell and absorb any losses they incur, but this is definitely not the only – or necessarily the best – option available.”

Rawson says that, thanks to the costs involved in making a property purchase, the losses on a sale made immediately after buying the property can be extreme.

“To break even, you’d need to cover your original purchase price, as well as your bond, transfer and legal fees, and the commission your estate agent will earn on your sale,” he says.

“If you bought your property for R1 million, that means adding around R50 000 to your listing price to cover the bond and transfer fees you paid, and at least another R55 000 for the commission that your agent will earn. That brings your listing price to R1.105m – over 10 percent more than you paid a few months before. The chances of achieving that kind of growth over such a short period of time are very slim.”

Thankfully, there are other options available that don’t involve taking a huge financial knock.

“Instead of selling, I always urge homeowners in this kind of situation to consider letting their property,” says Rawson. “You can then choose to rent a property for yourself in your new city, or apply for another bond and invest in a second property to add to your portfolio.”

Renting a home for yourself while paying off your original bond is typically the simplest and least financially-demanding option, but a second purchase may not be as difficult as you think – and the rewards can be high.

“Banks are very strict about granting second bonds,” says Rawson, “and in normal situations, people seldom have the additional income to qualify for more than they are already paying on their first home. However; when people move for a new job or a promotion, it’s often because of a fairly significant pay raise. This increased income, combined with the rental income from their first property, may well be enough to convince the bank of their ability to service another loan.”

As an additional incentive to encourage your bank to grant you another bond, Rawson suggests looking at any properties in possession, or distressed sales they may have on their books.

“Banks are often more generous with bonds on properties they already have a vested interest in,” he says, “and these kinds of sales also tend to be very well priced, and offer great value to buyers on tight budgets.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 20 Feb 2018
      Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Feb 2018
      The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.
    • 20 Feb 2018
      A major shift in the ageing paradigm has precipitated an equally dramatic transformation in the retirement sector, with modern accommodation options worlds away from the conventional model.
    • 19 Feb 2018
      Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
    • 19 Feb 2018
      The PayProp Rental Index Annual Review of 2017 shows that the rental market suffered from much volatility during the year. It kicked off with rental growth spiking in January with weighted year-on-year growth (YoY) growth peaking at 8.3% before dropping to 6.34% in July, dipping down to less than 5% in November and then experiencing a slight uptick at 5.75% in December.
    • 19 Feb 2018
      While most homes in cluster complexes, estates and other gated communities come with at least one garage or carport, residents would often like additional permanent parking or storage areas for things like trailers, bikes, boats and caravans.
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK