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[P815]Public Record Of Property

by Dirk Wessels, Dir

When I first moved up to Johannesburg and my career was just starting to flourish many years ago, I heard of and spoke to a number of people in a relatively short period of time with above average salaries who had lost everything and had to start over at a somewhat more mature age. I thought they were just stupid and never gave much thought to it, because it would never happen to me. Well, as Forest Gump says "It" happens.

What if the banks won't give me a home loan due to a bad credit record?

As I have mentioned before on my wealth creation site, I had a bit of a financial setback a couple of years ago. I am slowly recovering from that, but there's not much chance of a bank giving me a loan at this stage. I still have 2 judgements against me. However, it is possible to buy a property even with bad credit.

Installment Sale

One option is to buy a property through an Installment sale. This is not necessarily an easy option, but depending on your situation it could be the quickest way to get into the property market. With an Installment sale you need a third party to "give you a loan" and almost act like a bank for a period of time.

Basically, with an Installment sale you pay a certain amount extra for a property than it would sell for in the open market at this stage. Let's say Jack Flash wants to sell his house. He's looked at the market and believes he can sell it for R500,000. After performing a number of rituals including a 7 day fast, dancing naked on the hilltop and cutting off your left ear as a sacrifice, it has been "revealed" to you that Jack has recently won the lottery and has no immediate need for the R500,000, but just wants to get his money at some stage. Having looked at the property market in the area you believe that the value of the property will continue to rise and that it would still be worth your while paying R550,000 for the property. So, you go speak to Jack and offer him R550,000 for his property on condition that he sells it to you on an Installment sale.

With an Installment sale, the loan for the property remains in the name of the 3rd party, Jack in our example. The two of you then sign a contract that states that you are buying the property from Jack. You agree to pay R25,000 upfront, another R25,000 12 months later and a monthly Installment. This contract is completely legal and can be compared to the contract you sign when taking a loan from a bank. Generally there will be a clause that states that Jack may "take back" the property if you miss an Installment or x number of Installments. This is just to protect the 3rd party, who is really taking a risk in giving you a loan. This is true of any loan with a bank as well where they may re-posses the property if you fail to pay your Installments. Make sure you get a professional with experience in Installment sales to draw up the contract for you and explain the details to both parties.

There are two complications here. Firstly you need to ensure that it is worth buying the property at the higher value. It may seem that you are going to loose money if you pay R50,000 more for a property than it is worth. However, you need to look at the average property growth rate in that area and compare it to the current interest rate. Take a look at my explanation on passive income on my website. The following calculation is not 100% correct, but for simplicity's sake. If the interest rate is 10% and the property growth rate is 20%, it means that you'll recover the R50,000 within the first year even without taking the rent that you'll earn from the property into consideration. It means that you may not make as much profit as the next person, but it does help you to get (back) into the property market and work your way up from there.

The second problem is finding a person who is willing to sell their property on Installment sale. I don't know how you do this. Speak to a wealthy uncle or maybe a family member who qualifies for a second bond, but cannot afford the monthly Installment. You'll be surprised how easily banks give a second loan. If all else fails, do the naked dancing on the hilltop, listen to the wind and speak to your animal guide. Where there's a will, there's a way.

Clear your credit record

I know this is stating the obvious, but let me just say it. If you do have a bad credit record, you need to work out a plan of how to get out of that situation. It's so easy to get overwhelmed by financial mountains. You don't see your way clear to paying off that debt, so you just shove it to the back of your mind. Don't do this, the problem just escalates!! Go speak to a financial advisor and be honest about your situation. Ask them to help you draw up a plan to settle your debt and clear your name. Some of these guys are brilliant and know all the legal tricks to clear your name ASAP.

You also need to decide whether it makes more sense to settle your debt first or to buy a property while still paying off the debt. You need to compare the interest rate of your debt with the property growth rate, the interest rate of a bond and the rent you'll earn from letting the property. For example, if the property growth rate is 20% and the bond rate is 10%, but the interest rate on a credit card is also 20%, then it may be better to settle the credit card debt first. Do the math yourself.

An instalment sale is just one method of getting into the property market if you don't qualify for a home loan through a bank. My point with this article is that it is possible to get a home loan even when the banks tell you it isn't. The decision of whether you should buy a property at a slightly higher price and while you still have debt to settle is completely up to you and should depend, amongst other factors, on the property growth rate in your area relative to the interest rates of your bond and other credit facilities.

Best known for her ski resorts, Andorra attracts nearly ten million tourists a year, but it's not just the holiday makers who are falling in love with the country and buying second homes that is fuelling the price rises, the guide says.

'Quite a few tourists do like Andorra enough to buy a ski apartment, and there is an active local market too. But what really pushes the prices up is that there's a third stream of buyers, people from around the world who want to take residency and benefit from Andorra's tax haven status.'

Property currently for sale in Andorra include one bedroom apartments at 210,000 Euros, two bedroom apartments in Soldeu, the main skiing area of Andorra, at 272,000 Euros and 280,000 Euros in another ski village Arinsal, and three bedroom apartments in the capital Andorra la Vella at 333,000 Euros. Houses start from around 900,000 Euros.

Andorra property specialists have also noticed an increase in buyers recently, and comment that a large part of the increase in buyers is the increased attention from potential overseas property buyers in the UK.

'The number of buyers from the UK has increased quite noticeably over the last couple of years', they say, 'With many quoting higher taxes in the UK as their reason for moving to Andorra. Most seemed convinced that the tax take from their earnings will rise more in the years ahead, and are planning for retirement and selling their businesses now'.

They also comment that historically tax havens have been popular no matter how the economy is. When someone buys a property in Monaco it often doesn't matter to them if it's a few hundred thousand Euros as they're going to save more than that in tax during the time they are resident in Andorra.

Real Estate Price Increases

Demand for property in Andorra for the year ahead is every bit as high as in the past claim local estate agents, with many potential buyers already having planned visits.

Surprisingly perhaps for a tax haven, mortgages for a property are as available as many European countries, with rates around the same level. Up to eighty per cent of a property's value is often agreed by the banks in Andorra.

Buying a property in Andorra is often seen as a route to residency, which entitles people to live in Andorra and benefit from her tax haven status.

To obtain residency in Andorra, applications need to be submitted in Catalan. A notarised copy of the applicants passport, birth certificate and a certificate of good conduct from the home country are submitted at the same time. Residency normally takes between three and six months to be approved.

Once residency is granted, residents are supposed to spend six months a year in Andorra, but this isn't policed.

One of the drawbacks for those looking to become a resident in a tax haven when considering Andorra has been that the country has no airport of its own, and is unlikely to have ine future given that it is located in the Pyrenees. The nearest airports are Barcelona and Toulouse.

Recent improvements in the road from Barcelona to Andorra though have cut the travelling time by some thirty minutes to two hours fifteen minutes.

'Given the tax advantages Andorra has', note the Andorra travel guide, 'A two and a quarter hour trip to the nearest international airport could be viewed as a small price to pay for those who will be saving substantial amounts of money in tax. Especially when you consider that their properties could be rising in value quite significantly in the years to come.'

Article Source : Pg. 17

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Both Dirk Wessels & Roger Munns are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Dirk Wessels has sinced written about articles on various topics from Property Investment. . Dirk Wessels's top article generates over 590 views. to your Favourites.

Roger Munns has sinced written about articles on various topics from Marketing, Family Travel and Cars. YourAndorra.com offers details of an and. Roger Munns's top article generates over 201000 views. to your Favourites.