First Home Buyers
How We Helped
Michael and Sandra had a good budget that they were quite diligent with and this definitely assisted them in achieving their savings. After transfer duty costs, they estimated they would need to borrow an additional R490,000. We weighed up the pros and cons of having an investment property vs. a principal residence, and the effect this would have on their situation.
We weighed up the implications on Taxation, Cash Flow, Long Term Capital Growth and the general implications of holding an investment property that would be difficult to sell quickly if they were to find themselves in financial difficulties. We also identified the need for personal insurance once their property was purchased, to protect them against the possibility of not being able to meet their monthly repayments due to an unexpected illness or injury.
Once we presented the couple with some scenarios on what each strategy may look like, they were able to make a decision on what was best suited to their lifestyle, and decided to continue to rent and purchase an investment property. Our advisors then provided them with advice on the recommended insurance requirements based on an analysis of their needs.
Finally, we assisted them in reducing the principal on their loan in as short a time as possible, in order to make their property positively geared to later draw on for their next property. 12 months later, Michael and Sandra have R200,000 debt remaining on their property and are starting to plan for their next investment.
The Moral of the Story: Proper Estate Planning Can Reap Rewards.