Fix your bond rate now before interest rates rise further, says Rawson Finance Manager
Gavin Zinn, the newly appointed national manager of Rawson Finance, the new bond origination company of the Rawson Properties group, has joined other high profile figures in the property sector in urging bond holders who are nervous about the future - and in particular the possibility of higher interest rates - to see their banks now with a view to fixing their bond mortgage interest rates. Rawson Finance, said Zinn, can assist them in this as well as in other financial matters.
Almost all banks, said Zinn, are prepared to consider fixing interest rates, even for periods up to ten years. If a bondholder is concerned about his ability to pay a higher rate, this is the time to fix the rate for the foreseeable future.
Zinn said that the banks had very seldom publicised the fact that they are prepared in most instances to fix rates and to negotiate new repayment structures as they prefer the borrower to approach them. In almost all cases, however, they would rather assist the bondholder in some way rather than sequestrate a home on which payments have fallen behind - and they can be far more flexible than most people realise.
Zinn stressed that if the rate is fixed, the goal should be to gain peace of mind as a result of being able to budget for future payments. The main aim, he said, should however not be to beat interest rate fluctuations. Any bond originator who claims to be able to predict these should very definitely be mistrusted.
We have all from time-to-time been proved wrong in our predictions, he said, and it is very unwise to budget in these matters on the advice of one or two so-called experts.
Right now the going level for fixed interest rates, said Zinn, is around 14,5% - but this is likely to rise. If the rates later decline it is possible, for a nominal fee, to cancel the fixed rate agreement, so there is no serious risk involved in over-paying in the long run.
Bill Rawson, Chairman of Rawson Properties, pointed out that property is the only asset on which a fixed interest rate is possible. Motor vehicles, finance, store goods, credit cards and the like are all subject to a floating interest rate.
Zinn said that in the current very lean high interest rate property scenario, which could last well over a year, certain bondholders should make use of a consolidation service offered by Rawson Finance and others. With this, he said, the borrower can lump all his debts onto his mortgage loan subject to there being enough equity in his property and his existing repayments being up to date.
This arrangement usually results in the borrower taking longer to pay off the sums he owes and incurring more interest, but that surely is preferable to losing valuable assets, said Zinn.
Before joining Rawson Finance, Zinn had 25 years in home loan finance, initially with the traditional building societies such as SA Perm and UBS and later with banks such as ABSA and Nedcor.
He stressed that companies like Rawson Finance are very much a consultancy service and that the public should feel free to talk to them, even when they have no clear idea as to what alternative arrangements on bonds and finance may be possible. Rawson Finance, he said, already has 14 staff, of whom eight are consultants, and every one of them has in-depth experience in bond mortgage most, he added, have previously been through difficult times, like the present.
Article from: www.rawson.co.za