“Do you know about Comprehensive Home Owners Insurance Cover?” I asked Dimakatso. She didn’t know about it. I then explained to her that this type of insurance pays for major damages to homes which are caused by fire, floods, pipe bursts or any other such events. If her parents had this type of insurance for their home, the insurance would have repaired the roof and they would have had to pay about R750 or so in excess. She would not have had to take the R334 000 in short term debt costing her over R12 600 in monthly instalments to fix the roof, CLICK HERE to remind yourself of how she got into the debt.
Many people do not have comprehensive home owners insurance [HOCIC] – especially those who own their homes debt free. This is why when a home gets burned down, usually, it is the end of that home. If the owners of the home had the insurance, the insurance would rebuild the house and they would only have to pay the excess. This was my first recommendation to Dimakatso that she needed to get HOCIC ASAP and I referred her to someone who would assist her with this cover. With global warming and extreme weathers, it has become even more important to have the cover, even if your home is paid up
Dimakatso’s parents accepted my 2nd recommendation i.e. that they should sell the house to Dimakatso. Because they are unemployed, they would not qualify for a home loan. A home loan of R334 000 would cost Dimakatso about R3 500 only in monthly home loan repayments. This is far less than the R12 600 she is paying because of the short term loans. She would save herself a whopping R9 100 per month by converting the short term loans into a home loan. Her parents agreed to give her the R344 000 from the proceeds of the sale of the home so she would settle the short-term loans. I guided her to get the Offer to Purchase and Acknowledgment of debt by her parents. BUT, I also said she must apply for R500 000 home loan so she would have extra cash to pay the transfer and bond registration fees and possibly even buy her first car in cash in an auction.
It has been an emotional roller coaster for her because she has had to learn to live with so much hope and uncertainty all at the same time as we do not know whether the plan will work or not. She is almost out of her debt but not yet there yet. I referred her to a mortgage originator so she would not have to go to every bank to apply for a home loan. When you want a home loan, it is always best to approach a mortgage originator when you are buying a home because you don’t want to apply to each bank individually and you also want to ensure that you get the best home loan rate. Using a mortgage originator is FREE of charge. Next time, I will share with you what the outcome of her application for a home loan was. Banks are still calling for several documents from her and we are hoping to get the final response soon.
If you are in a process of buying a home and want to be referred to a Mortgage originator, drop me an email. If you own a home and you do not have Home Owners Comprehensive Insurance Cover, also drop me an email @ email@example.com