“FINANCING A HOME.”

Otago Daily Times, Issue 19528, 10 July 1925, Page 12

“FINANCING A HOME.”

ADDRESS BY MR 11. S, ADAMS. “Financing’ a Home,” tho first of a aeries of lectures on “Homo-building,” was given in tho Y.M.G’.A Assembly Hall last night by Mr H. S. Adams. 'Mr V. T. Drew occupied tho chair. _ The lecturer gave a forceful and interesting address, and the information ho imparted should certainly prove of value to tho many present. Hie first tiring to bo considered, said Mr Adams, was to choose a homo according to the buyer’s capability to purchase. According to tho English law, the buying of a house included tho land on which it stood, and everything on that land belonged to tho purchaser. The only persons who could adequately select and buy a house were architects and builders. Tire majority of people looked carefully to some of tho most prominent things, while they overlooked such important matters as drainage and site. Although every care might be exorcised by the purchaser, many things remained which only an export would look for and ascertain. If, after signing a contract, a purchaser found there were no drains, the • responsibility, as a general rule, lay on him and not on tho vendor-. It v’ss al.vays advisable to secure tho service? of wmo competent person when purchasing a house. The contract to buy a house should always 'bo in writing, and purchasers should see that everything that was part of tho house was entered. _ Everything should bo read before signing any contracts, and, better still, tbo purchaser’s solicitor should see that it was in order. Purchasers should always endeavour to buy for cash; the smaller tho deposit the worse the bargain in most cases. Another important aspect was to consider the re-sale value of property. This was important from a mortgagee’s viewpoint, as in tho event of his havinc- to utilise tho powers of the mortgage he assured himself that ho would got (ho money he bad lent, and, in addition, be reimbursed for anv expense that might have been involved. If ho did not do so, and lost monov. on tho deal, ho would bo more careful in the future. Interest on first mortgages at the present time was 6 per cent., said Mr Adams, and it was likely that it would remain so for some years. Most second mortgages were granted on tho instalment principle. In tho ordinary course tho principal and interest should bo wiped out in three years. That period was selected as it corresponded with tho period of the first mortgage. Interest on second mortgages amounted to between 7i and 8 per cent. To have a good character was a decided advantage to persons seeking to finance a homo. Very often a poison’s character was regarded as a hotter safeguard than tho security itself. Mr Adams then dealt with Starr-Bowkott societies, which, ho said, were a good means of financing a home. Ho detailed thdir formation and organisation, and methods of work, saying that subscribers did not get something for nothing. Tnoy paid in subscriptions for eight, 10, or 20 years, and received no interest on their money. As a general rule subscriptions on a share account had to bo kept going whe.ther tho money had been borrowed from tho account or not. The chief advantages of such societies wore that they encouraged thrift and assisted saving. They were very valuable to young men or women who were thus assisted in purchasing their homes. In dealing with State advances and mortgages, Mr Adams said that they were most advantageous as a method of finance, hut the dilliculty was to secure them. So great was tho demand that tho Government was usually a year behind in dealing with tho applications. The Government was more likely to lend monov for (ho erection of a house than for tho purchase of one already erected. Tho interest was per cent., and tho period of tho loan was usually 20 or 30 years. Tho essence of a leasehold was that a purchaser did not become the owner of tho land, but merely tho tenant. If a purchaser bought freehold lie had both the land and the buildings, but if he did not comply with the conditions of a lease lie lost lila right over both land and buildings. An important point was to secure a perpetual right of renewal of the louse, which usually was fixed for a period of 14 or 21 years and renewed on the expiry of the period. Purchasers, said Mr Adams, should never undertake more than they could pay. A purchaser should budget bis income and expenditure, and arrange his finance accordingly, so that he could pay his deposits and interest when they fell due. Ho should never buv a house or enter into a transaction which ho could not see through. One point to bo remembered when buying was that the ordinary agent was tho agent of the seller, and accordingly he was in duty hound to sell to tho host advantage. In conclusion, Mr Adams stressed the importance of seeking sound advice when undertaking any important transaction. A number of written and verbal questions were answered by tho lecturer, who was then accorded a hearty vote of thanks by acclamation.