FOR those Zimbabweans working in the diaspora, if you have the privilege and opportunity to access a home loan or mortgage, you should not view this as just a debt payment instrument.

With judicious management, it can become an integral part of an individual’s financial management system. It is up to each individual to make this system work the best to your own advantage by making suitable choices.

For many young people who are just getting into a formal job, getting a home loan seems to be a pie but in reality it does not have to be. The law is South Africa and other countries allows unrelated people to syndicate and purchase unaffordable property as a team. I have seen other nationalities and races do this but very rarely have I encountered young Zimbabweans implementing this.

In practice, three friends who have just left college and are sharing a three bedroom apartment where each one has their own bedroom can collectively get a loan to purchase this property together by combining the amounts that they qualify for. In any case, the amount they pay monthly is probably equivalent to what they would pay ordinarily to someone else for renting their property.

The fear among many young people is that it feels so permanent like marrying your friends, but it does not have to be. This can purely be a business decision which can be terminated at any stage by a predefined mutual agreement.

Subsequent to the global financial crisis, asset prices are still not too far from the bottom and in many countries property prices are closer to what they were pre-2008. So our three friends can virtually be in the same position as people who acquired their properties in various world markets before 2008 if they choose to enter the market now. If after 5 years the three friends decide to go their separate ways, they can sell the property and split the benefit of capital growth that would have accrued during that period thereby creating their own seed to do new activities.

In my early days in South Africa, I struggled to get a home loan in the country. Firstly, I was told being a foreigner implied higher risk to the banks. Secondly, I was a consultant, which in the banking system back home was taken as a euphemism for being unemployed as you could not dutifully produce a pay slip like what other normal people do when the system demands so. I remember others used to cook their own pay slips just to get past the bureaucrats masquerading as bank managers.

In keeping with their own internal risk management system, the bank managers were right. The first home loan I was able to eventually extract out of a bank was at prime interest rate plus one. This was in the days when prime interest rate used to hover around 17% per annum in South Africa and coming from Zimbabwe where prime used to vary from nobody really knew to some stratosphere percentage, this arrangement really made sense to me.

Prime has subsequently come down to 9,5% in 2010 which is quite low by our standards but is considered very high in developed economies where others have a prime of about 3.5% and approaching zero in other countries.

After paying prime plus one for almost two years, I went back to my bank manager who in principle agreed that he was really charging me “tsotsi rates” even though I had proved to be a fairly normal law-abiding resident. After much hustling and haggling, the best rate I have been able to get from my bank was prime minus 1.7% which I consider to be fairly decent.

When I first bought a new vehicle in SA even after paying a 10% deposit, all I could manage to get from my bank on the vehicle loan was prime plus 4%. An interest rate differential of 5.7% from the same bank to the same customer did not make sense to me so I used the equity that I had accumulated in my home loan to settle my vehicle loan. The proviso was that I had to continue to pay exactly the same amount that I was paying for my vehicle but now into my own home loan. Failure to do this would have resulted in me paying for depreciation over a twenty year period.

Consolidating your debt into the lowest interest rate instrument you have access to in your country of residence is always an option to consider. Most of our local credit cards here have a ‘budget facility’ where the bank really nails you by charging you interest rates as high as prime plus 6% when you just pay the minimum monthly amount.

I am always amazed at people who tell me that they cannot afford to invest in property but when I examine their budget I discover that they have a car loan where they are paying R6,000 (over $800) and they are paying rent of R5,000 financing someone’s property. If you are in this position and you interrogate your priorities, you will be amazed what you can achieve with reprioritisation.

Given our Zimbabwean experience, anything other than cash was considered an investment. If you drive a brand new car from a show room in South Africa it automatically loses 20% of its market value. For the rest of the car’s life span, it continues to lose value.

It is as certain as day and night that good times and bad times will always follow one another. The global financial crisis may have made putting money in property seem like a bottomless pit but in a few years, it will be just a small blip in the greater scheme of things.

Property investment, unlike other get rich quickly schemes, requires a lot of patience which will be ultimately rewarded.  Every person under the sun requires a roof over their heads. It would really be sad after 30 years of working in various countries you discovered that you have been financing other people’s portfolios and there is not a single asset to your name.