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03/07/2008 12:29 PM - (SA) "Investors see opportunity for second homes" 04-07-2008
According to the newsletter, prospective buyers are encouraged by a wider selection of properties on the market and are also on the lookout for bargains as some over-extended investors come under pressure to sell because of higher interest rates. "However the new class of investors are not primarily interested in the buy-to-let market. Rather they see the current conditions as a good opportunity to buy quality homes as a longer-term investment that can double up as a holiday home or eventually as a retirement home. "But investors must look before they leap into the market and should - as always - do their homework before they make any offers, the first criterion being to determine whether they can genuinely afford the investment in a second home and to leave room for possible further interest hikes," says Property Signpost. It goes on to say the second requirement is to establish the size of the bond for which they will qualify. "It would be presumptuous to simply assume that their banks would be willing to extend a bond under the same conditions as any existing bonds they may have. For instance, they may well find that banks are only willing to finance a smaller percentage of the purchase price of a second home, or that a higher rate of interest would apply." Other financial factors that should be borne in mind include transfer costs, Capital Gains Tax and holding costs such as rates and taxes or levies, says the newsletter. "However, in the current uncertain financial climate, bricks and mortar still represent a solid investment, especially for buyers who are willing to wait for capital growth. And to get the most use out of a second home, it makes sense to buy in an area within easy reach."
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