Applying for Mortgages successfully has becoming increasingly difficult. With a worldwide financial downturn, the banks are clamping down to try to decrease their losses. With stricter procedures, many individuals are struggling to get the needed finance, either for buying a new property or a further bond on an existing property. So for individuals that need to apply for a mortgage, there are some steps they can take to increase their chances of an approval.

No. 1

Make sure you qualify

This is especially important if you are purchasing a new property. First find out what amount you can qualify for on a mortgage loan. Stay within this amount. A guaranteed way to have your application declined is by applying for more than you qualify for. The banks are not lenient with regards qualifying clients, and will not consider your application further.

No. 2

Mortgage Affordability

Go through your budget and see how much you can afford to pay on a bond. And be reasonable when doing this. If you can’t prove to the bank that you will be able to afford this new expense, they will say no. By granting Mortgages their clients can’t afford, the bank is running a big risk of not getting their money back. This is a risk they are not willing to take.

No. 3

Have a good credit/payment profile

Your credit profile is the first thing the bank will look at. From how you have serviced your existing commitments they will draw conclusions, and decide whether they feel you will meet your new commitments. So make your full payments on time. Too much debt can also affect your application. So if you can pay something off, this can help with both your exposure and affordability.

Approved Mortgages are not something impossible. With a bit of planning and common sense you are very likely to be successful with your application.

If you feel like it is too much to tackle an application on your own, there are professional mortgage consultants that can assist you.

If you want more advice I am happy to spend some time with you and answer any questions you have about choosing the best Mortgage for you. – Morne Prinsloo

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Fixed mortgages are mortgages that are secured or pegged at a particular rate.  This means that if the reserve bank increases or decreases the repo rate someone that has a fixed mortgage won’t be affected – your installment won’t increase or decrease.

Keep these essential things in mind when applying for a fixed mortgage:

1.  Possible interest rate decreases

When looking at fixed mortgages you need to be mindful of the current interest rate trend.  Are rates currently on a downward trend? Or are interest rates generally going up?

If interest rates are coming down, it wouldn’t be wise to opt for a fixed mortgage as you will lose out on cheaper interest rates and lower monthly repayments.

The opposite is also true.

2.  High Fees to get out of a fixed mortgage

I you have already locked yourself into a fixed mortgage you may have difficulty getting out of it as usually there are high fees and certain restrictions applicable.  Be sure to ask about the terms and conditions before signing and read your contract.

3.  Fixed mortgages rates are higher

You should also be aware that fixed mortgages are locked in at higher rates than the prevailing prime interest rate. At the time of writing this article the prime interest rate is 9 %, at typical 3 year fixed rate would currently be around 11.05%.

How does this affect you?  If the current trend in interest rates is that it’s going up, and rates normally go up in 0.5% increments, it means that if you had a variable rate it would take you almost a year to get to 13.05%. That means that having a variable interest rate would still allow you to save as the rate goes up, rather than having a fixed interest rate.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za