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Monthly Archives: March 2015

Report a deceased estate to the Master

I am a member of the Wills, Estates, and Trust committee.

A question was raised at a meeting:

It appears that there can be fraud in the issue when changes are made to Letters of Executorship in deceased estates

We discussed the withholding of bank account details and policy numbers when you report an estate – and just to list the value of the assets

The Master only requires the information in the section 9 inventory (first inventory) when you report an estate, to determine if the value if the estate exceeds R250 000.00 – If less – an section 18 (3) letter of appointment will be issued.

Confirmed with a senior official at the Master –

When we report an estate over R250 000 they are just concerned that we list that values – not so worried about account and finer details –we can leave it out initially:

  • They are aware of fraud etc with L E’s and trying all to keep record of want they issue and when they certify a true copy – they will endorse on all pages
  • Section 18(3) Estates – less than R250 000 value
    • Account details must be inserted –as the Letter or Authority must reflect bank account no
    • Appointment of agent
      • Does not appear in 18 (3) form
        • Not required
      • Will require however is minor are involved and in particular of the minors inherit more than R5 000 cash

Meyer de Waal

meyer@oostco.co.za

021-4610065

 
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Posted by on 27/03/2015 in Content

 

YOUR INVITATION TO THE HOME OWNERS EDUCATION WORKSHOPS

Meyer de Waal, the convenor of the HOME OWNERSHIP EDUCATION TEAM says that they may consider to select A B de Villiers in their team – if he had the same specialist knowledge on home ownership education, if compared to his cricket skills.

To sign up for these exciting workshop – click here.

Even if you already own a property, it will be worth your time to come and listen to Neale Petersen and Vangile Makwakwa as they will inspire you to plan ahead how to make the money with gearing and using money of a bank and let a tenant work for you (help you pay off your bond) – once you are ready to start to buy a second property as an investment.

To the average cricket fan, the following names of the HOME OWNERSHIP EDUCATION TEAM would not mean a lot, but most of us in the property environment, would recognize the big stars, currently in top form, and we announce,  in no particular order our team: (a mix of fast bowlers, amazing spin bowlers and wizards with a bat)

  • Verna Pugin
    • FLISP Expert and Home Ownership Educator
  • Neale Petersen
    • Founding Editor and Publisher of Real Estate Investor Magazine, Publisher, Entrepreneur and Mentor
  • Vangile Makwakwa
    • Author of “Heart, Mind & Money: Using Emotional Intelligence with Money”, Bus Sci Finance, (UCT) MBA, (Simmons School of Management), Financial Literacy speaker for the Sanlam Youth Segment, Part time Finance and Economics Facilitator, USB-ED (Stellenbosch B School and Founder of  Wealthy Money, Blogger, coach, writer and speaker on the link between personal finance and emotions.
  • Cara Lippert
    • Debt restructuring expert
  • Tony Collins
    • Professional Valuer, Lecturer, Author of An Introduction To Commercial Property Finance, Development And Investment , Part-Time Lecturing In Property Development And Investment
  • Annette Evans
    • General manager for IEASA Western Cape Region and in charge of Training and Management of Propstats
  • Mark Witzmann
    • Conveyancing expert, attorney & property lecturer
  • Meyer de Waal
    • Attorney and conveyancer, property lecturer, developer of My Budget Fitness, Rent2buy, Mobile2budget, Consumer Housing Education and My Bond Fitness.

Passion, experience and specialist knowledge in the Property Industry were the key aspects we recognized when we identified the role players in the HOME OWNERSHIP EDUCATION TEAM” says Meyer.

The first HOME OWNERSHIP EDUCATION WORKSHOP will be held in in Cape Town regions and will start on 18 April 2015.

The focus will be:

WORKSHOP – CONTENT

The workshop will be dedicated to First Time Home Buyers and you will get to know:

  • How to go about to buy your own home
  • How to get out of debt
  • Make use and apply for the Government available subsidies
  • Save thousands when you buy your own home
  • How prepare yourself, your budget and your credit profile to apply for a home loan
  • How to use our tools to manage your budget
  • How to calculate the extra costs that you have to pay to buy a property – transfer costs, bond registration costs and bank administration costs
  • How to do a due diligence on the house that you want to buy – before you buy
  • And many more
    • If you attend the workshop, you will also receive extras to the value of R1 500.00
      • 6 module course – e guide – how to buy your own home
      • 10 % discount for your FLISP administration fee
      • Tool to create and manage your budget
      • Personalised Credit Report
      • Access to our latest software to check your actual purchase power, combined with your affordability
      • Subscription to the social media network of our expert panel
      • & once you bought your new home and taken transfer
      • Our 24 month Guide – The A – Z Guide – How to own your own home.

DEBT RESTRUCTURE & CREDIT PROFILE IMPROVEMENT – PERSONAL CONSULTATION

If debt restructure or credit profile improvement is required – we can arrange for individual & private consultations with our debt restructure experts.  We will provide you with a separate details and a an estimate of the costs once we have more information from you.

To sign up for these exciting events – click here.

For more information on the workshops and the background information on the “big stars” – click here.

 
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Posted by on 25/03/2015 in Property

 

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Paid up adverse credit records

The Department of Trade and Industry published the National Credit Amendment Act (NCAA) and supporting Regulations on Friday 13 March 2015, with the effective date being same date of publication.

The NCAA requires credit providers to furnish all registered credit bureaux with information relating to paid up adverse records within seven days of receipt of settlement from a consumer. Other data suppliers are required to provide this information in their next data submission to the credit bureaux.

In turn, credit bureaux are required to remove adverse status codes in respect of which the debt has been settled, either partially or in full, within seven days of receiving the information from any data supplier.

The changes made by Experian SA to comply with this requirement will include the settled adverse status codes being removed whilst ensuring that the payment history is retained within the account information section on the credit bureau record.

In the event of the debt being fully settled, as reflected in the Furniture Retailer example above, the balance is zeroised and the account status would reflect as paid. The payment cycle will reflect a ‘0’ which represents ‘current’.

In the event of the arrears being partially paid, two scenarios are possible as reflected in the Bank – Credit Card example.

  • In Scenario 1 above, the Bank-Credit Card balance reflects the updated outstanding amount. The account status would be open or current and the payment cycle will reflect a ‘0’ which represents ‘current’ as provided by the credit provider.
  • In Scenario 2 above, the Bank-Credit Card balance reflects the updated outstanding amount. The account status would be open or current, however the payment cycle will reflect the months outstanding as provided by the Credit Provider in the data submission.

For all examples, the payment profiles would no longer reflect as default and would be displayed in the account information section as per the illustration above.

Illustration of what the online data string will reflect:

Transaction Type – Output String – Pre NCAA

Pre-NCAA adverse account status code:

Months In Arrears               99876 Status Code                        L Status Code Description     Handed over

Transaction Type – Output String – Pre NCAA: Debt settled in full

Post-NCAA – Debt settled in full – adverse account is now displayed in the payment profile section:

Months In Arrears              099876 Status Code                       ‘P’ Status Code Description     Paid

Transaction Type – Output String – Post NCAA: Debt partially settled

Post-NCAA – Debt partially paid – adverse account is now displayed in the payment profile section:

Months In Arrears              099876 (As provided by Credit Provider) Status Code                        ‘  ‘ Status code Description      Open or current

OR

Months In Arrears               499876 (As provided by Credit Provider) Status Code                        ‘  ‘ Status code Description      Open or current

Regarding the submission of the information relating to paid up adverse records by the data suppliers, we would like to remind our clients that the paid up adverse records must be submitted electronically as a separate file using the same layout as your current monthly submission.

We are in the process of interpreting the finer points of the regulations first released to the market last Friday and will keep you updated in terms of our approach.

Please do not hesitate to contact your account manager should you require any additional details at this time.

Kind regards, Experian South Africa

 
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Posted by on 20/03/2015 in Content

 

Invest R1m from a bond to gain maximum tax advantage.

A Fin24 user wants to know where he can invest his R1m from a bond to gain maximum tax advantage. He writes:

I have two townhouses that have been paid off and earn income in the form of rentals. I have applied for a housing bond of R1m on both properties. The bond will generate taxable interest against the rentals.

Where can I invest the R1m (products) and for how long in order that I should pay zero or a very small amount of tax?

Matthew Chapman of NFBFinancial Services Group responds:

First of all congratulations on your property portfolio play. This strategy has worked well for investors for a number of years and is an intelligent means of leveraging against existing assets to invest further.

There are a few things to consider when taking debt out against a rental property:

  • You should be able to survive any vacancy periods where you are not receiving an income from the property. The bond payments calculated over 20 years at prime (9.25%) will be approximately R9 150 per R1m bond.

Remember also that we are currently in a low interest rate environment and whilst we do not see rates increasing this year, they are likely to climb eventually which will subsequently increase your monthly repayment. At a prime rate of 10.25% payments become R9 820 monthly; whilst at a prime rate of 11.25% payments are R10 500.

  • As you correctly pointed out the interest portion of the bond repayment is deductible against the rental income generated on the specific property that bond was taken out against.

In the early years of the bond the majority of the repayment is interest and will therefore result in a higher after tax yield. However, towards the end of the bond period the principal forms the lion’s share of the repayment which will result in a smaller deduction and a higher taxable rental income.

In terms of investing the R1m received from the bank it is important to target a return that is in excess of the after tax net finance hurdle rate (breakeven rate at which the lump sum must grow in order to equal the cumulative bond repayments) in order to make this strategy viable.

In order to achieve such returns one must take on a level of market risk, as interest yielding investments typically generate returns which are both lower than this level and less tax efficient.

We would therefore recommend that a long term time horizon is considered to be able to ride out short term volatility in search of a higher return. We typically recommend a period of five to seven years for this type of investment. This ties into your query on how long you should invest.

In terms of your query about tax friendly investments you have a number of options although no investment product is entirely tax free but rather tax efficient.

I have listed a number of potential products below with basic characteristics but it is very important to fully understand the liquidity and other constraints that go hand in hand with the reduced tax.

A full explanation of which is out of the scope of this discussion.

  • Tax Free Savings Account – Returns, in the form of interest; dividends and capital gains, are non-taxable within this product. Contributions are limited to R30 000 per year and R500 000 over a lifetime, which limits the options for this type of capital sum.
  • Retirement Annuity – Returns are untaxed within the product as above, although tax is deferred to a date where a lump sum is taken or income is drawn (after conversion to an annuity.) Withdrawals are subject to tax and cannot be made until age 55.
  • Endowment – Returns are taxed at 30%, as opposed to the marginal 40% in the case of high income earners. Liquidity is limited in the first five years.
  • Linked Unit Trust – Returns are fully taxable but full liquidity is retained.

It is difficult to point you in an exact direction, both on the product as well as the underlying investment side, without having full insight into your entire portfolio; your goals; your tax profile; your liquidity needs and your attitude towards risk.

As this cannot be construed as formal financial advice, it would be in your interests to contact a certified independent financial adviser, who will be able to conduct a full analysis on your financial position and goals and provide professional guidance with regards to your entire financial plan and risk profile.

 
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Posted by on 16/03/2015 in Content

 

FIRST TIME HOME BUYERS AND OWNERS ARE LOSING THOUSANDS

Many home buyers and current new home owners are unaware that first time home buyers may qualify for a housing subsidy under the FLISP grant.

“If they do not investigate and make use of the opportunity they may be losing thousands of rands by not claiming the FLISP subsidy, but also losing out on the prospect of reducing their bond repayment and bond term and as such losing out thousands more” says Verna Pugin who conducted an investigation into FLISP subsidies.

The word FLISP is an abbreviation for “Finance Linked Individual Subsidy Plan”, initiated by the Government to assist first time home owners in acquiring their own homes.  It is available to all first time residential home buyers who earn between R3 501 – R15 000 per month and whose home loan has been approved, (as a pre-requisite) as well as current first time new home owners (who have already taken transfer). Current new home owners must apply for the assistance within 12 months of taking ownership.

The minimum FLISP subsidy is R20 000.00 and if such subsidy is paid into a bond of R500 000.00 as a “once-off” payment, the home owners can save up to almost R100 000.00 and reduce his/her bond repayment from 20 years to almost 18 years, saving 2 years of bond repayments. Similarly, a subsidy of R40 000.00 awarded to a qualifying home owner with an income of R11 700.00 who may qualify for a home loan of R400 000.00, may save more than R170 000.00 on bond repayments, and reduce the bond repayment term from 20 years to 15 and a half years.

The maximum purchase price of R300 000 was removed since 1 April 2014, yet few existing home owners are aware of this opportunity to claim their FLISP subsidy.

The benefit to a bank will be that an additional payment into a bond account will also reduce the debt risk for a bank, as it reduces the loan to value ratio. ”We suggest that clients approach their banks to reconsider and reduce the interest rate that is applicable to a home loan once the FLISP subsidy is paid into their home loan account”, says Vern Pugin, who made an intensive study of government assistance over the past few years and she realised that home owners need to be assisted and informed about their rights to obtain FLISP subsidies. The research done by Verna led to hosting workshops with property developers, estate agents, home buyers and home owners as she realised the dire need therefor amongst all stakeholders in the property market.

FLISP subsidies are available to pre-qualified property developments and to obtain such approval, property developers need to submit their application in advance to the Department of Human Settlements.

The pre-approval of a home loan remains a barrier for many first time buyers, property developers, sellers and estate agents as they do not want the property transaction to be held up, due to the long waiting period to obtain a FLISP approval. Up to recently home buyers did not have access to the services like the software developed by My Bond Fitness to pre-check a buyer’s credit profile status and affordability in advance.

With the services provided by My Bond Fitness www.budgetfitness.co.za a buyer can obtain his affordability within a few minutes and as such he determine if he will be able to qualify for FLISP and then in advance prepare himself for the FLISP application.

The FLISP subsidy is however not limited to property developments only as this grant is available to the open market for all first time buyers as well. Any type of residential property can be bought, inter alia plot and plan except vacant, land, a new house, or a property with an existing houses on it, as long as the applicant has pre-qualified for a home loan when he or she submits their application for the FLISP subsidy. Applicants will have to meet the qualifying criteria which can be found on our website and will be advised by us as to which documentation is to be annexed in support of their application.

Verna realised that home ownership education will play a vital role in creating sustainable home ownership and teamed up with Meyer de Waal, who developed the My Bond Fitness as well as the Rent2Buy concept.

Home ownership education forms a vital part of the home ownership journey and Rent2buy process.

With Rent2buy, aspiring home owners will first rent the home they want to buy, should they not meet the strict requirements of a bank to qualify for their home they want to buy, and during the rental period, they secure the property with the Rent2Buy agreement, then have the time and opportunity to improve their credit rating and affordability and save towards a deposit to enhance their chances the next time they apply for a home loan, some 12- 18 months later. Verna says such opportunities will allow the processing a FLISP subsidy application much faster as by the end of the rent2buy period, all the required FLISP documentation will be ready and available for processing.

For more information – go to www.flisp.co.za

These two articles were featured in the recent Real Estate Investor Magazine Here is your link to the latest March 2015 issue of the Real Estate Investor Magazine.

 
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Posted by on 10/03/2015 in Conveyancing, Property

 

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Struggle to pay off your debt ?- Not winning? – Take action and re-negotiate your debt payments

A Fin24 user has been paying off her debts since 2009, but feels she is not making any progress. She writes:

I have a question regarding the idea that paying off one’s debt depends on how much you make available to pay.

It has been suggested that one should be able to pay off your debt between five to seven years if you don’t have a house or car, and within 10 to 30 years if you do.

I do not have a house nor a car and am under debt review. I have been paying since 2009.

It feels like I am never going to pay these accounts off as the interest and charges on these accounts get added.

It looks like I am not winning. I am with a debt councellor, but just feels like nothing is happening. Please can you advise?

Deborah Solomon of The Debt Counselling Industry (DCI) responds:

There are a few issues that you want addressed and statements that you have made that need to be corrected.

You are correct when stating that paying off one’s debt, would depend on the amount one makes available to creditors monthly.

The assumption on the next statement, namely that one should pay off the debt between five to seven years with no bond or car, is incorrect.

This is because this factor would be determined by the amount of debt, the interest rates, the monthly repayment amount, whether your debt counsellor has taken the in duplum rule into account or whether there is there an annual escalation.

Depending on any of these above factors, the outcome would vary by years.

An example of the above could be the following:

Client A

A client can only afford R1 000 per month as repayment towards his creditors.

The debt counsellor does a restructure without trying to lower the interest rates and without adding in an annual escalation of 5%.

The restructure works out that client A would become debt free in a seven year period.

Client B

The client can only afford the R1 000 per month as repayment towards his creditors.

The debt counsellor does a restructure with lowering of interest rates and adds in a 5% annual escalation.

The restructure works out that client B would become debt free in a three year period.

Consumers need to realise that the more they can pay off while under debt review, the sooner they will become debt free.

Small amounts make large dents in the debt, especially if a court order has been granted and there is a fixed calculation that must be adhered too.

I would suggest the following in your case:

Get a copy of the court order as well as the repayment plan.

Make sure that the repayments are being adhered to by getting monthly payment reports from the debt counsellor.

Get detailed statements from all credit providers from the inception of each account to date.

Check to see if there are any other charges other than the capital amount and interest being charged.

Anything other than interest and capital would not be in line with the court order and your creditors would need to adjust their systems accordingly.

Don’t allow the creditors to intimidate you. You have a court order, which everyone must adhere to, even the banks. There are no exceptions.

In duplum rule

From the statement of a creditor, determine what date default occurred and then double that debt.

From the date of default, the debt, which includes all service charges, interest rates, credit life insurance, collections and legal fees, may never become more than double.

This is in terms of Section 103(5) of the National Credit Act. It is called the in duplum rule and is one rule every credit provider tries to hide from every consumer.

Consumers must become more aware of their rights, especially in this regard and start challenging their creditors.

The debt under debt review can only go up to a certain point and then must come down.

I suggest you speak to your debt counsellor and follow the above suggestions and I am sure you would be pleasantly surprised.

It does take many hours and this is why many debt counsellors don’t enforce this rule.

But every consumer under debt review needs to work together with his or her debt counsellor, especially when brining to light issues such as the in duplum rule.

– Fin24

My Budget Fitness developed with a team of experts a Debt Negotiation structure – to avoid going into Debt Counselling as we saw that many clients stay trapped in debt.

The only way to get out of debt is to analyse your portfolio, the work out a plan forward and get a top negotiator to renegotiate your debt and then stikc ot the new affordable plan of repayment.

Contact Meyer – meyer@mybondfitness.co.za for more info

Meyer de Waal

021- 461 0065

Disclaimer

Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.

Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

 
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Posted by on 10/03/2015 in Content

 

3 Financial Tips for Home Buyers

Buying a home is a major step towards creating a haven for your family, and making a long-term investment in your financial future. As such, it is a purchase that should be carefully considered and planned for.

This is according to Steven Barker, Head of Home Loans at Standard Bank, who says the good news is that despite tough economic conditions, funding is available to people wishing to buy homes.

He says as buying a home is so important, it is worth doing some homework before approaching a bank for a loan. Consideration should not only be given to finances, but to the property itself, he says.

This means, buyers should find out more about the area in which the house is situated, the average value of properties in the suburb, and take time to have the house examined for possible defects such as poor plumbing, potential electrical problems and structural concerns such as rising damp.

In addition, always look at the type of ownership you are considering, for example, a freehold (stand-alone) house versus a sectional title (flat or complex) property, as it’s important when buying a sectional title property that you review and understand the financial standing of the complex before you buy into it.

Once you are satisfied with the location and condition of the property, the financial planning process begins.

Baker shares some helpful tips:

1. Checking your credit history

When a bank assesses a person for a home loan, their credit history plays a major part in whether they are suitable. It pays to check your credit rating, to ensure that any outstanding debts are settled and make sure that any accounts you may have are correctly serviced.

2. Affordability

– Make sure you have sufficient money to pay a deposit on the house. Although a bank assesses people’s financial situations individually, it is now rare to get 100% bonds.

– Remember the additional costs. These include attorney’s fees, transfer costs and registration fees.

– Enquire about rates and taxes that will be payable on the property.

– Plan for the one-off costs such as electricity deposits, and consider what additions like security are likely to cost.

– Check what insuring the property will cost you on a monthly basis.

– Consider credit life cover to protect the loan outstanding balance in the event of disability, dread disease, retrenchment or death.

3. Future financial commitments

Plan for the future by making sure that your personal cash flow can cope with increased payments if interest rates should rise. By preparing a personal budget that allows for costs to increase, you will avoid future financial difficulties.

Baker says taking a proactive approach to monthly bond payments when buying a house also sows the seeds from which you will reap rewards. He says if you buy a house and can pay extra money on your bond, the benefits can be significant; any additional money paid in is credited against the account and saves on interest costs.

These savings can be significant and knock years off your repayment period, he explains.

Additional money paid in also acts as a buffer against future rates increases, he says. These will have less impact, as you will already have been paying a higher amount.

“A home loan is an investment in your life and the lives of those closest to you. Taking care of your financial status when your house is acquired will bear fruit for many years to come.”

Source: Property24

With the latest software of My Bond Fitness – www.mybondfitness.co.za you can do your own credit check and affordability check all in one – in a time of less than 5 minutes. It will give you an accurate estimate of your own credit profile and affordability. Once you are in possession of such information – you will be able to negotiate a much better deal with a bank to negotiate the best possible interest rates and loan term.

 
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Posted by on 10/03/2015 in Content