Why you need to motivate your home loan application.

Well it is quite simple.  A motivation is usually provided to highlight or explain anything about your homeloan application that falls outside what would be considered a “normal” application, or even when it you feel it necessary for the bank to have a clearer understanding about you the prospective client and your situation.

For example, if you have finished or are finishing your monthly car repayments now, or in a couple of months’ time, it is important to supply this information in the home loan motivation with the necessary proof to establish the your true and realistic affordability.

Another example may be if you are  a rehabilitated insolvent. In this instance it is necessary to supply a full explanation regarding the circumstances that resulted in the insolvency as well as a copy of the certificate of rehabilitation and a copy of the final liquidation and distribution statement reflecting details of all of your creditors. A mortgage origination consultant would, however, use a motivation whenever they feel it is necessary to highlight positive attributes about the you as their client and the property and to remove any negative attributes such as past adverse credit score and sentiment.

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

HERE’S TO MAKING AN INFORMED DECISION !

With the new Consumer Protection Act coming into effect on 1 April 2011, business sectors in all industries of trade have had to re-look their level of service, ensuring that they provide their clients or customers with all necessary information to aid them in making an ‘informed decision’. The use of plain language is especially important for this new Act, as often consumers don’t truly understand what they are binding themselves to.

Here’s a short-list of words that you might come across when applying for a home loan – the first step to buying your dream home – explained in plain language. The explanations below will make filling in your Application Form a breeze. That being said, the best way to ensure that your application form is filled in correctly, you can consult a mortgage consultant who will be able to take you through the procedure step by step.

APPLICATION TYPES

Individual – One person only is applying for a home loan that they will be paying for themselves

Multiple –  Larger groups of more than 2 people applying for a home loan

Private Company – (Pty) Ltd: A small company with few private shareholders apply for a home loan in the company’s name.

Public Company – A company which sells shares publically and has many shareholders applies for a home loan in the company’s name

Trust Company – A company formed to act as a trustee or to deal with trusts. A trust company does not own the assets its customers assign to its management, but it may assume some legal obligation to take care of assets on behalf of other parties.

Private Trust – An arrangement whereby property is managed by one person (or persons, or organizations) for the benefit of another. You may find this in Family Trusts. You can apply for a home loan in the name of your Family trust.

Surety – a person who assumes legal responsibility to pay for someone else’s debt should they become incapable of paying.

SOURCE OF INCOME

Donation/Gift/Winnings – If you have been lucky enough to win the lottery or receive a hefty cheque from your long gone uncle Scrooch, be sure to indicate this on your application form.

Inheritance – If you have received any funds passed on to you by a deceased family member, you need to indicate this on your application form by ticking the “inheritance” box

Investments – Do you have any investments that are regularly profitable? Tick this box if you receive money from investments

Pension – Over 65 and receiving pension every month? If you plan on using these funds to pay off a bond, you need to indicate so on your application form.

Policy – If you have a policy that pays out any funds to you on a regular basis, you can use it to pay towards a bond.

Salary – Most applicants will apply using the funds they receive from their salary which is normally paid on a monthly or fortnightly basis.

Offer to Purchase – An OTP is a formal document in which the buyer proposes to buy a property for a certain amount and under certain conditions. Once the seller accepts this proposal, a contract is created binding the buyer and seller to the conditions.

Documents required – When applying for credit, you will get asked to submit required documentation. Each person’s application differs but the basic required documentation remains the same for each applicant.

FICA

FICA is the Financial Intelligence Centre Act, 2001. The verification process for an individual investor includes obtaining the following documentation: Without these documents, your application will not be processed at all.

• A certified copy of your identification document
• Verification of your residential address through the provision of an certified/original copy of mail delivered to your residential address or a signed Affidavit from the owner of the property
• A cancelled bank cheque or a certified copy of your bank statements (6 months)

Property valuation – Once you have made an offer to purchase, the property needs to be valuated to determine whether the amount you have offered coincides with the value of the property. If the figures are synonymous, the Approval in Principle is drawn up.

Approval in Principal – After the property gets successfully valuated, the bank will deliver an Approval in Principal which will stipulate certain conditions including the loan amount and offered interest rate. You can now decide whether you would like to accept these conditions after which a Final Grant will be delivered.

Interest Rate – Currently, the Prime Interest Rate is 9%, the lowest it has been in over 10 years! Here’s what’s to keep in mind when it comes to Interest Rate.

Fixed Rate vs Variable Rate:

The interest rate on a fixed rate home loan does not change. This type of home loan is advantageous because you will be protected from rate increases and your monthly instalment will remain consistent. However, the disadvantage is that you will not benefit when the prime rate is dropping, which has been the case in the past few years. Also, a fixed rate will usually be slightly higher than the prime rate (at the moment of your application).

Final Grant

If you have accepted the conditions set out in the Approval in Principle, the Final Grant will be issued, which is the last step of your home loan application. Signing of the Final Grant binds you to the transaction and from here transports and registration of the property are handled by the chosen attorneys.

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