8 Step Financing Process (2nd,3rd,4th Bonds)

July 31, 2007

By converting the equity in your property into cash, you can improve your monthly cash flow in various ways.
The money gets paid into your bank account and you can use it at your own discretion
.

Step 1
Apply for a loan through your bond broker

Step 2
Bond application goes through a process of approval by the Financial Institutions Credit Division

Step 3
The financial institution sends out a valuator to assess the value of the property.

Step 4
Bond is granted, and financial institution advises Registering Attorney to register bond.

Step 5
The buyer’s Bond Account and Supporting Documentation are prepared by the Registering Attorneys for signature by applicant. Up to this step takes about 5 working days. At this stage one can apply for bridging finance where up to 80% of the loan amount will be paid out. No need to wait until registration.

Step 6
Once all the documentation is signed bond documents are lodged in the Deeds Office.

Step 7
The Deeds Office takes approximately 7-10 working days to check all the documentation before they are ready for registration.

Step 8
On Registration, the Bank pays out the loan amount. The whole process can take anything from 2-4 weeks, if there are no complications.

For more information on debt consolidation, bonds and other related articles go to www.globalproperty.co.za

Advertisements

How to get the best price for your Home.

July 27, 2007

· Hire an Agent who can give your home or property constant exposure to prospective buyers 24 hours a day seven days a week. Next step is to:

· Clean the yard and garage of clean of any rubbish lying around, keep the lawn mowed and grounds looking tidy. Buyers will go by their first impressions as they drive up to your home. If they see you have “pride in ownership” they will be more inclined to offer you full price. Buyers usually offer hundreds or even thousands of rands less for an “Un-kept” looking property or one in a run-down condition. You wouldn’t take a dirty car into a dealership and pay a high price for a dirty car full of junk, the same goes for your home. Buyers are more apt to buy the home that looks clean and shiny over one that shows it has had little care.

· Have the roof cleaned and repaint the exterior if needed. This can bring you many added rands from a buyer. Buyers will pay more for a home if they don’t think they have to spend money on it right away for maintenance.

· Repaint interior walls white or very soft neutral crème-white if the walls are now colored bright or unusual colors. Prospective buyers will want to imagine their own belongings in the rooms…and sometimes be turned off by bright or inappropriate colors. Keep everything as “neutral” as possible.

· Organize your cupboards and closets. Have them looking neat and orderly.

· Have your windows sparkling clean, your floors or carpets cleaned and counter-tops free of clutter. Repair damaged vinyl or counter tops.

· Pack up everything you don’t need to use on a daily basis. You need to do it sooner or later, and doing it before you list will not only save you time later, but will allow the buyers to “mentally move-in” with their own belongings. You might even consider putting some furniture or other things into storage while the home is being marketed. Too much furniture or rooms filled with all your special “treasures” will make the rooms look smaller, and will distract the buyer. Remember, you want the buyers to be busy asking your Agent about the home, not admiring all your furniture. Keep the rooms “simple” and uncluttered. This is the time to “show off your home” not your “possessions”.

· Toss out any dead or dying plants and only keep a few nice ones in strategic places. Oh yes…NO DIRTY ASHTRAYS PLEASE!

· The easiest way to pack up your “extras” is go into each room one at a time, and take everything you can do without on a daily basis into the middle of the room, then pack it up and put it away or store it.

· Remove family photos from mantels, tables and walls. They can distract a buyer who might be more interested in looking at the family pictures than looking at the home.

· Next, go into the kitchen and make sure your oven is clean and remove all the small appliances from the counter tops. Store them under the counters for quick retrieval when needed. Cluttered counter tops make them appear to be smaller than they really are. Keep counters wiped and free of food and spatters. Empty garbage cans often and don’t allow them to have an odor that may turn a buyer off.

· DIRTY, SMELLY, KITTY-LITTER BOXES ARE A DEFINITE NO-NO!!!!

Pet smells are a real deal killer! Buyers don’t want to have to smell unpleasant odors while viewing a home…they leave quickly and won’t stay long to look at the home if it smells like a kennel. Keep pets out of the way during showings. Big dogs frighten some buyers so bad that they won’t go near a home that has one locked inside. Place your family pet in an appropriate “safe-place” at all times and alert your agent to their presence. Posting your pet’s name somewhere that can easily be seen by your Agent can be helpful too, and less traumatic for your animal if they have a ‘stranger’ in their house that can call them by name.

· Turn the lights ON in all the rooms just before a showing and leave the home during the showing whenever possible. Buyers sometimes ask sellers questions about personal matters that should not be discussed, trying to “feel you out” for possible price negotiation information. Your Agent knows what information the buyer should be given in order to realize the highest offer possible. If you are not present during the showings, this can be avoided. If you must be at the showing, don’t volunteer such things as: “Why you are selling”, “How long the home has been on the market”, or any other confidential information to a prospective buyer or his Agent during a showing. This kind of information can and will affect any offers you might get from the buyer.

For more information on debt consolidation, bonds and other related articles go to www.globalproperty.co.za


National Credit Act Explained

July 17, 2007

What is the purpose of the National Credit Act?

The National Credit Act, which came into effect on 1 June 2007 which aims to ensure the regulation of credit granting practices. The Act will promote a credit market that is fair, accessible and responsible, transparent, and setting a framework for various types of credit transactions.

The Act is enforced by the National Credit Regulator which purposes to educate and protect consumers from reckless lending, high interest rates and unfair lending practices. A database of credit transactions is being implemented by the National Credit Regulator, including information about credit agreements, which are provided by lenders and credit bureaus.

This database can be checked by credit providers to determine whether a consumer can afford additional debt. The Act imposes greater demands on lenders to ensure that consumers understand the nature of their credit agreements.

Which agreements are regulated by the Act?

  • Micro-loans and pawn transactions
  • Home loans (Mortgages)
  • Personal loans
  • Overdrafts
  • Vehicle finance
  • Credit Cards
  • Furniture Credit
  • Retail Credit
  • Any other type of credit or loan

Which Acts are replaced?

The National Credit Act replaces the Credit Agreements Act (which regulated installment sale agreements), the Usury Act (which regulates money lending) and the Exemption Notice to the Usury Act, which exempted micro lenders from the interest rate cap imposed on banks.

Consumer rights

These rights include:

  • To apply for credit
  • You will be protected against discrimination in the granting of credit
  • You will be informed why credit has not been granted, should you ask
  • You will receive a free copy of your credit agreement
  • You will receive a credit agreement in plain and simple language
  • You have the right that your personal and financial information are being treated confidential.
  • You should understand all fees, costs, interest rates, the total installment and any other details
  • You can say no to increases on your credit limit and
  • You decide whether or not you want to be informed about products or services via telephone, SMS, mail or e-mail campaigns.
  • You can apply for debt counseling should you be overwhelmed by debt.

What does this mean?

Reckless granting of credit is prohibited under the Act. Reckless credit is when a credit provider gives you a loan without determining whether you can repay the loan. The Act reminds you that you have both the right and responsibility to understand and question how your credit agreements are structured; what payments you will be required to make, and what the terms and conditions involve.

You must be given a written quotation which discloses all costs before you sign a credit agreement. Credit providers often try to reduce your common law rights through complex clauses, but this cannot happen anymore due to standard credit agreements.

Furthermore, a court can set aside all or a part of a debtor’s obligations if the granting of credit is deemed to have been reckless. The Credit Act also makes provision to settle credit agreements without penalties or notice.

For more information on debt consolidation, bonds and other related articles go to www.globalproperty.co.za


7 Questions You Must Ask When Applying for a Home Loan

July 13, 2007
  • What is the interest rate on this mortgage?
    Be sure to ask for the annual percentage rate (APR) of the loan’s interest. The APR is usually higher than the originally quoted rate because of the additional fees involved in procuring a loan. You must beware of APR found in advertisements. Often these are used in bait and switch schemes to get customers in the door. Always ask for an itemized list of rates and fees.
  • What rewards will I get?
    Often lenders have reward schemes. Link your home loan to a Voyager or e-Bucks account. Get info on your lenders rewards schemes and make use of them.
  • What are the fees, if any, involved in locking in an interest rate?
    Interest rates are constantly fluctuating and it is possible that it could change between the time you apply for a loan and the time you close. Often you can “lock in a rate” that will keep your interest rate the same from the day you apply. Please make sure that you find out if there are any fees involved with this.
  • Is there a prepayment penalty on this loan?
    Prepayment penalties may be added to lower the loan’s interest rate. There are many types of prepayment penalties that can be added to a loan. Make sure that if your loan has a prepayment penalty, you are aware of the terms and conditions.
  • What documents will I need to have?
    This will depend on the type of loan you choose. Most loan applications will require full documentation of income, assets, debt payments, etc… If you apply for a building loan additional documents will be have to be submitted (building plans etc). A loan application in a companies name will require further financial statements, etc.
  • How long does it take to process a loan?
    It can take as little as two weeks, to as long as 60 days or more. Be sure to have the lender give you the most accurate timetable possible so you can determine how far out you need to lock your interest rate.
  • What might delay approval of my loan?
    If you provide complete and accurate information to the lender, the process usually runs smoothly. Be sure to tell your lender immediately of any changes to your income or any new debt or marital status while your loan is processing. There could be delays your lender discovers any undisclosed credit problems so be sure to be as accurate as you can.For more information on debt consolidation, bonds and other related articles go to www.globalproperty.co.za

  • How To Afford A Mortgage

    July 10, 2007

    Minimum Cash Requirement

    Many times a 5-10 percent cushion is built into the sales price of a home to allow negotiation of a sales offer. Just remember that in a hot real estate market, the seller may not be anxious to accept a low offer and may reject the agreement on a home that you really want due to small differences. If you play the game, you must be prepared to lose and go on to the next property.

    You should try to get pre-qualified by a lender prior to shopping for a home. A pre-qualification is a strong marketing tool when making an offer that may contain many a number of seller concessions. Telling a seller that you are already pre-qualified for a loan makes the acceptance of a low offer much more palatable.

    How to Maximize Your Income

    Most lenders will require that you disclose your income from the previous few months and use this income to qualify you for a mortgage. They will ask for tax returns, or bank statements to verify the income. The lender will then apply a formula to the income to determine your ability to repay the loan. A common requirement is that the mortgage payment cannot be greater than 30 percent of the borrower’s gross monthly income.

    One way to expand your purchasing power is to obtain a low, low interest rate mortgage such as a variable rate mortgage. They may offer up to a rate of 2.5% percent under the going rates. The disadvantage to these types of loans is that the rates are subject to change as frequently as every few months. If your interest rate is linked to the JIBAR rate it will be subject to more regular changes. This type of loan can however add thousands to your purchasing power due to the low initial rate.

    If you don’t have the stomach for a variable rate mortgage, explore fixed rate type loans. The rate will stay the same over a certain period, after which you can renegotiate with your lender. The only negative is that if interest rates are going down, that you will increase your borrowing cost.

    Finding a Bargain Home

    One of the clichés of the real estate world is the most important thing to consider when buying a home is “location, location, location.” That also applies when trying to find a bargain in a home. Generally it is better to buy a “fixer-upper” in a terrific neighborhood rather than a great but bargain-priced home in a less desirable neighborhood. There are always bargains in run down areas, but while these houses may offer a lot of house for the rand, they will be difficult to sell and may have little or no appreciation despite the time, energy, and money you have poured into them.

    Forget about buying a home from the newspaper auction notices, they are difficult to purchase and better left to the pros. Instead foster a relationship with a real estate agent and remain loyal to that agent. You want to find a home that may need some cosmetic work but is basically sound. Estate sales are probably the best area you want to explore, and try to investigate listings that have been on the market for awhile. Keep in mind that the reason a property has been on the market for a long time is because it is less desirable for some reason. Remember, most every property has its price and will ultimately sell when the price/value ratio becomes attractive.

    If financially able, look to buy a home during periods of high interest rates or economic recession. During those times home prices may drop or the seller will be more amenable to accepting low offers. High interest rate periods don’t last forever, and when rates come down or the economy improves you can refinance for a lower rate and even take out some excess cash from appreciation.

    Credit Scores and Below Prime Loans

    Prior to the early 2000s home buyers had to have a very good credit history to qualify for a loan. Those who had auctioned off properties, repossessions, or bankruptcies in their history were told to wait seven years and to walk the straight and narrow credit path in the meantime. The good news, however, is that now many more people are eligible to obtain a mortgage albeit at a higher than the prevailing rate.

    During the 2000s credit scoring also came into effect. Credit scores attempt to classify a person’s credit history into one three-digit number ranging from 300 to 900. A credit score of 650 or above is deemed to be a “good” credit risk by many lenders, the higher the better. In fact, a credit score of 700 or above can allow for a 100 percent LTV loan at only a little higher interest rate. A score of 625 may be acceptable, but scores from 525 to 625 usually fit into the sub-prime loan category. A score under 500 makes it very difficult or impossible to obtain financing of any sort.

    Hidden Costs in a Mortgage

    Most every loan is going to have associated with it fees for insurance, valuation, etc. Most of these fees are commonly required amongst all lenders and they must give you a list of their costs associated with a mortgage. Despite the fact that the costs are disclosed, some lenders may include extraordinary “junk” fees in their costs that an unwary buyer may not recognize as an extra fee. At the time of a loan application lenders are required to give you a written closing cost estimate.

    First, determine if you’re rate are being loaded. Some lenders advertise artificially low rates to attract customers but load up on fees to compensate for a lower rate. A tip off to a lender that charges hidden fees would be a lender who advertises interest rates that are appreciably lower than the competition. Interest rates are very competitive and shopping for the very best rate may in fact work to your disadvantage. Differences in rates of 1/8th or 1/4th of a percent result in very little difference in a payment and may be offset by poor service and added hidden fees.

    Mortgage companies and fees. Mortgage companies often advertise that through their intervention the financial institution will subsidize the client’s bond registration fees. But, at what cost to the client? Saving R2 000 for example in bond registration fees, but ending up paying R200 000 more in interest is a great deal for the bank, but not for the client.

    Mortgage companies are often owned by a bank or an estate agency. The real issue is a serious lack of independence and conflict of interest. Clients have no guarantee that their mortgage application will be channeled to the lender that offers the best interest rate instead of to the one offering the broker the highest commission. These fees will be subsidized by the banks customers in the form of higher charges and higher interest rates.

    Always work with an mortgage firm that is independent from any bank and who’s services are FREE and without any premiums attached to the client.

    Correcting Past Credit Problems

    Contrary to what you may have heard, credit reports are for the most part accurate. Common last names and a “Jnr.” in the family does cause a few problems but credit reports identify people by their identity number, address, and name. If you have an issue with your credit report, credit-reporting agencies are required to attempt to resolve the problem. Most of the information has to be provided by the individual and they should stay in touch for as long as it takes, frustrating or not. There are two main credit repositories in South Africa: Trans Union, and Experian. These companies each hold a database of information and provide it to a more local credit-reporting agency that may actually be issuing the report. If you have a dispute, you can go direct to the two repositories to attempt to clear the issue. Their addresses are listed below.

    As mentioned before, credit scores in the 500 range can cause problems when attempting to obtain new credit. You can raise your score if the original information was incorrect, or you can over time improve your payment history, but it may take a few years of diligent pay history to appreciably raise your credit score.

    If worse comes to worse declaring bankruptcy may be your only answer, but despite its growing popularity, I recommend it only as a very last resort. A bankruptcy will stay on your record for years and make obtaining credit difficult. There are two methods to declare bankruptcy: Voluntary and Compulsory Insolvency (bankruptcy). If your creditors have you sequestrated, this is known as compulsory sequestration. If, however, you decide to have yourself declared insolvent, such act is referred to as voluntary sequestration.

    Should you not have yourself declared insolvent, but wait for your creditors to take the necessary action, there is a possibility that they will not succeed in their application for a court order. It may no longer be in their interest, on account of the fact that your assets are worth too little to them.

    In the absence of compulsory sequestration, your debt simply increases further (as a result of interest), and your financial suffering is aggravated and endures for longer. The descriptions above are overly simple and general, but the bankruptcy option is a poor one and you should explore your options with an attorney before making a decision. After a period of time a rehabilitated insolvent may apply for credit, but this will depend on numerous factors. Most lenders state that at least a year must pass after a person’s been rehabilitated and a new good credit history must be established. A difficult chore, but it can be done. Make sure that rent or mortgage payments have no late payments for at least the previous 12 months. Avoid paying in cash; make all payments by check or credit card where your payment history can later be verified. It will also help to explain to your lender that the situation that originally caused the problem, a job loss, illness, etc., has now been resolved.

    For more information on debt consolidation, bonds and other related articles go to www.globalproperty.co.za


    9 Dirty Little Secrets Your Credit Card Company Hopes You Never Find Out!

    July 4, 2007

    Dirty Little Secret #1: Debt Addiction

    Consumer debt is way out of control, but the dope (I mean “debt”) pushers just keep on pushing. The average consumer has between 3-5 credit cards with an average balance per card of R5,000 – R15,000. (That’s up to R75,000 in debt in case you haven’t done the math!) Millions of South Africans charge thousands of rands to credit cards every year. Sure, there’s safety in numbers, but is this the company to which you want to belong? I don’t know about you, but I’d much rather belong to the “below average” customer group that has less than R5000 in TOTAL credit card debt.

    Credit card companies keep offering us new cards every week (think of how many you have gotten in the last year!) with higher credit limits and cash advances. Basically, they insult our intelligence. Many consumers are flattered when they receive their “PRE-APPROVED PLATINUM VISA, just fill out the form below, sign and send back” letter. We think we’re being rewarded for a job well done. The job, of course, being able to spend money with the best of them and pay it back better than most. Don’t get SUCKED into this mental trap!!! STOP TRYING TO KEEP UP WITH THE JONES’. THEY’RE HEADED FOR BANKRUPTCY ANYWAY!

    Dirty Little Secret #2: The Never Ending Balance

    If you make the minimum payment due on your average balance of R15,000 each month, your credit card won’t be paid off for over 30+ years! It’s called “amortization,” or in the case of credit card repayment, I should say “lack of amortization.” In lay people’s terms, this simply means, you have no real term set in order to pay this back. It’s open-ended, as in “NEVER ENDING!!”

    They’ll let you pay on that same balance forever if you like. When you buy a car, you may finance it for five years. You know if you never send an extra dime but your monthly payment to that loan company or bank you will own that car on the day of your 54th payment. But that’s not the case with credit cards. They are “revolving” accounts. Kind of like the earth revolves around the sun… I guess you can say they are like the Energizer Bunny, “THEY KEEP GOING, AND GOING, AND GOING, AND GOING, AND GOING…”

    Dirty Little Secret #3: The Transfer Trap

    Because banks know that credit card usage is at an all time high, most of them are killing each other to get your business. Many offer promotions like transferring balances from other cards to the new card they are offering you. If you transfer balances from other cards, they say they will charge you a reduced rate of interest on those portions that are transfers. This sounds like a great deal (going from 18% to a promotional rate of say, 9.9%); however, most of them have a catch. For instance, if you do not charge something on the new card each and every month, the interest goes up to the regular rate of the card (which is often high), or if you make one late payment, you forego the lower promotional rate, and the rate again goes up to the regular rate of the card. Beware of the “Transfer Trap.” All you’re really doing is transferring your agony from one company to another, and avoiding the real solution; finding a workable plan that will get you debt free once and for all.

    Dirty Little Secret #4: Minimum Payment Misery

    If you keep making your minimum payment only, your balance will rarely ever get paid off. Have you ever noticed how, while your minimum payment due on your credit card is R600, your balance only came down R50 rand? WHY??? That’s because we pay unruly amounts of interest on credit cards. Even the so-called “low-interest rate” credit cards don’t show their payments going toward bringing down their balances. All they do is just require a lower minimum payment. Sure, this might help your monthly outgo right now, but what’s it doing to get you out of debt faster? NOTHING! That’s because the MINIMUM PAYMENT DUE ON CREDIT CARDS ARE BASICALLY “INTEREST-ONLY” PAYMENTS, and making the minimum payment on a credit card is a guaranteed way to NEVER PAY IT OFF! Suppose you owe R2,000 on a card with 19% interest and a 2% minimum payment. Paying just the minimum every month, it will take you 265 months–over 22 years–to pay off the debt!

    Doubling the amount paid each month to 4% of the balance owed would allow you to shorten the payment time to 88 months from 265 months–or 7 years as opposed to 22 years.

    Dirty Little Secret #5: Fine Print Fiasco

    Example: Your rate of 6.9% is a teaser rate. After six months, your rate will be 21%. The Teaser, a.k.a. introductory rate credit card has made credit card banks and centers BILLIONS of rand. Because so few consumers ever read the FINE PRINT. You know, the print that only the eyes of a 12-year-old can read without getting a migraine? These credit cards come with stipulations. There are too many “catches” to name. But, I assure you, they are there. Credit card banks don’t make any money if they are financing your debt at below Prime interest rates. So I leave you with one last thought on this topic, “IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS.”

    Fight Back by Understanding These Terms

    The key to reading your credit card statement is to understand the terms on it. Here are explanations of common terms:

    · Amount due: Some cards use this term to describe the minimum monthly payment. This is not the total you owe on the card.

    · Annual percentage rate (APR): This is the finance charge, expressed as an annual figure, such as 21%.

    · Cash advance: A loan in the form of cash (as opposed to purchases of goods or services) made through a credit card.

    · Due date: The date by which your payment must be received by the company, for you to remain in good standing.

    · Finance charge: The interest charge on your outstanding credit card balance.

    · Grace period: A period in which you can make new purchases without paying interest. (Not all cards have a grace period.)

    · Late fee: A charge assessed if your payment is recorded after the due date.

    · Minimum monthly payment: The smallest amount you can pay to avoid being delinquent. Paying the minimum is the most expensive way to handle your credit card bills.

    · Monthly periodic rate: A fraction of the APR (1/12), the rate at which interest is assessed during the billing period.

    · New Balance: The total owed after new charges and credits have been added up.

    · Over-credit-limit fee: A charge assessed if you put charges on your credit card that exceed your approved credit limit.

    · Previous (or outstanding) balance: The amount you owed last month, after that month’s payments and charges were added up.

    · Transaction fee: A charge for making a purchase or receiving a cash advance.

    Dirty Little Secret #6: The Cruel Cost of Cash Advances

    A cash advance is a loan billed to your credit card. You can obtain a cash advance with your credit card at a bank or an automated teller machine (ATM) or by using checks linked to your credit card account. Most cards charge a special fee when a cash advance is taken out. The fee is based on a percentage of the amount borrowed, usually about 2% or 3%. Some credit cards charge a minimum cash advance fee, as high as R20. You could get R100 in cash and be charged R20, a fee equal to 20% of the amount you borrowed.

    Most cards do not have a grace period on cash advances. This means you pay interest every day until you repay the cash advance, even if you do not have an outstanding balance from the previous statement. On some cards, the interest rate on cash advances is higher than the rate on purchases. Be sure you check the details on the contract sent to you by the card issuer.

    THE BOTTOM LINE: It is usually much more expensive to take out a cash advance than to charge a purchase to your credit card. Use cash advances only for real emergencies.

    Dirty Little Secret #7: Hidden or Unexpected Fees

    Most people look for a card that doesn’t have an annual fee, but did you know that there are other fees that can cost you more in the long run?

    · Late fees Most cards charge a fee when payments arrive late, after the due date. Some banks wait a few days before assessing this fee, but many impose it the day after the payment was due.

    Some companies have a set fee, such as R75 or R100, while others charge a percentage, such as 5%, of the minimum payment due. Just paying late fees twice in one year can cost you more than an annual fee.

    To avoid late fees, mail your payment in plenty of time to arrive before the due date. If you pay your bill at the bank’s branch or ATM, find out how long it will take to process your payment. Sometimes payments made at a branch or ATM are not credited for a few days.

    · Over-credit-limit fees Most cards assess a fee if you charge more than your credit limit. These fees are charged each time you exceed your limit, so you could be hit with several of them during one billing period.

    Most banks have a set fee, such as R75 or R100, while others charge a percentage, such as 5%, of the amount you are over your limit.

    If you charge R2000 over your limit, with a 5% penalty, you will pay a fee of R100. This is in addition to interest charges.

    · Lost card replacement fees A few companies charge people whose cards have been lost or stolen more than once or twice. These fees are usually R35 or R75.

    Pay Attention! Special fees can cost you a lot, so keep track of when you mail your payments and how much credit you have left.

    Dirty Little Secret #8: Sneaky Ways They Calculating Interest

    Most banks use an “average daily balance” method to calculate interest.

    Average Daily Balance Method

    1. Every day, the bank adds your charges and payments to learn what you owed it that day. It adds these totals and divides that figure by the number of days in the month, to determine your average daily balance.

    2. Then the bank divides its annual interest rate by 12 (the number of months in the year) to get a “monthly periodic interest rate.” For example, an 18% interest rate divided by 12 equals a monthly rate of 1.5%.

    3. The bank multiplies your average daily balance by the monthly periodic interest rate, to obtain the finance charge for that month.

    In calculating your daily balance, most banks include charges made during the month (“average daily balance, including new purchases”). Others exclude those charges until the next statement (“average daily balance, excluding new purchases”), which is to your benefit.

    Dirty Little Secret #9: Two-Cycle Billing Method

    Some banks retroactively eliminate the grace period by using a “two-cycle billing method.” If you don’t pay the entire balance, the finance charge is based on the sum of the average daily balances for both the previous and current months. (Some banks exclude new purchases from the finance charge calculation of their two-cycle billing method.)

    You are only charged for a two-month time period in the first month you don’t pay all charges. People who sometimes pay in full and sometimes leave a balance will pay about the same amount under the two-cycle method as with a “no grace period” card.

    For more information on debt consolidation, bonds and other related articles go to www.globalproperty.co.za


    5 Things To Make You STOP PAYING RENT

    July 3, 2007

    People fear what they do not understand. A good example is the purchase of a home. The average consumer knows very little regarding the home buying process. Between finding the right house, making sure it won’t fall apart the day after it is purchased, and finding the best financing, it is no wonder that so many people are afraid to purchase homes. Buying a home is one of the most important financial decisions an individual will make. For a first-time home buyer, the decision to purchase a home can be daunting. It will represent a major step forward as the individual/family will be assuming potentially its largest responsibility. As with any major decision, it is important that everyone, especially first-time home buyers, take full advantage of the information and training that is available to more clearly understand the home buying process.

    To prepare, you should do research and be fully informed before beginning the search for a dream home. Here are five steps to get started:

    1. Before you start your house search, think carefully about what it will be like to be a homeowner. For most people, home ownership is an integral part of South African lives. That is not even to mention that the advantages (tax benefits, pride of home ownership, financial investment) far outweigh any drawbacks.

    2. Your credit history is one of the first things a lender will look at in making a decision on your loan. Contact one of the three major credit-reporting agencies to obtain a credit report. Review it carefully to be sure all the information is correct. If you find discrepancies, you should work with the credit agencies to resolve them.

    3. Saving for a deposit can be one of the biggest barriers to home ownership. Mortgage lenders recognise this dilemma and many now offer no-deposit loans. In addition to this they are also offering 105% home loans to pay for transfer and registration fees. So you can buy a house without needing any money for a deposit and transfers etc.

    4. Before you begin working with an Estate Agent, first go to your local bank and ask them to pre-qualify you for a mortgage. Most will provide this service free of charge. Pre-qualification will let you know exactly how much you can spend on a home purchase BEFORE you start your search. A pre-qualification also makes you a more attractive buyer when you are ready to make an offer on a home. Home sellers are more likely to accept an offer from a buyer who can demonstrate the ability to secure financing.

    5. Many financial institutions offer home buyer education classes to prepare you for home ownership. Classes normally run about four hours and cover the basics of home buying. Some of the topics covered are how to apply for a loan, work with an Estate Agent, make an offer on a home, and the responsibilities of home ownership.

    More people who are renting property now could qualify to become a homeowner. Do not let fear or ignorance stand in your way.

    For more information on debt consolidation, bonds and other related articles go to www.globalproperty.co.za