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Don't dump your property on market
"However, there are pitfalls. If you sell your property in a hurry, you could actually realise less than its market value and possibly even less than the outstanding loan amount.
"Secondly, property remains the best way of building wealth. Continuing to pay rent indefinitely, without any investment return, is clearly not wise."
On the other hand, he says, the intention may be to sell with the idea of biding your time until interest rates decrease again and theoretically make property more affordable.
"The fallacy of this argument is that you will almost certainly not time the market correctly and when you do decide to buy again, prices are likely to have increased, offsetting any decrease in interest rates.
"The banks are also not keen on you disposing of your property under financial duress and they would certainly wish to avoid repossessing the property. Accordingly, you will almost invariably find they make every effort to ensure you can remain the owner.
"That could, for example, involve extending the life of your bond from 20 years to 25 or even 30 years, so reducing your monthly repayments although of course greatly increasing the ultimate cost of the property in the process |
Posted on Tuesday, January 22, 2008 (Archive on Thursday, January 31, 2008)
Posted by hayleym Contributed by hayleym
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