Mortgage Origination and Bond Experts
South Africa's Leading Bond Originator and Mortgage Expert Blog !
South Africa's Leading Bond Originator Blog - Apply Online Now!
Our Mortgage Experts Specialises in First Time Home Buyer Loans, New Home Loans, Building Loans, Further Home Loans, Bond Switches and Mortgages throughout South Africa. Click Here to go to The Mortgage Plus Website.
We offer a wide range of advice on different home loan options - 0861 11 11 93*
0
Earn R15 000 or less a month, looking to buy a house? CAPE TOWN – Absa (JSE:ASA) recently made a big song and dance about its MyHome product, helping those households who earn less than R15 142 a month to buy a property by offering them a 110 percent bond, no deposit required and all bond costs included in the bond. Is it now the low-income bond market leader and what are the other banks offering in that sector?
A Standard Bank (JSE:SBK) spokesperson referred me to a release it sent out last year where the bank relaxed its credit restrictions, claiming it was the first to do so. The changes it made were specifically designed to benefit first-time entrants into the housing and general credit markets. They were not for the low-income bracket but aimed at those with a solid income but don’t necessarily have a sizeable deposit to put down.
Its Jump Start Bond allows first-time home owners to apply for a bond of up to R1m, to qualify a household needs a combined income of close to R30 000 and monthly repayments will be close to R10 000 a month.
As long as they use the residence they are buying as their primary residence they are able to qualify for a cost-inclusive 104 percent LTV (loan-to-value). The loan-to-value ratio expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. For eg, if a borrower wants R450 000 to purchase a house worth R500 000, the LTV ratio is R450 000/R500 000 or 90 percent (LTV)).
Standard Bank now allows LTVs of 100 percent (up from 90-95 percent) and it has started accepting low-risk non-cheque Standard Bank customers and low-risk non-Standard Bank customers for home loans.
Standards Bank’s Dream Start Bond is more suitable to low-income earners. It is aimed at those earning a single or joint income of between R1 500 and R6 000 a month, excluding housing subsidies or allowances.
First National Bank’s contribution to the low-income bond market is the Smart Bond. This is for applicants earning a monthly household income of R15 000 and below. Those applicants who qualify for the Smart Bond will be eligible for 100 percent bond finance, with no deposit required.
Nedbank (JSE: NED) also relaxed its lending criteria last year. Whereas for the previous year the bank required deposits of 10 – 20 percent for new home loans, this was driven mainly by expected declines in house prices, the deposit requirement has now been reduced to 0 – 10 percent, depending on the risk profile of the client. Clients also have the option to have a five-year fixed interest rate or a variable interest rate. Home-ownership education programme is provided to first time home buyers – for free and the minimum loan amount is R20 000.
For low-risk clients – both existing Nedbank clients and new clients it will lend up to 100 percent of the purchase price of their new homes. In general, though, it continues to believe that putting down a 5 – 10 percent deposit is good practice for both the client and the bank, and therefore will continue to encourage clients to do likewise.
While all banks do seem to cater for low-income earners it appears that Absa’s 110 percent offering is the most effective product targeted at these earners. The fact that borrowers who take advantage of the product receive the added benefit of an HIV/Aids voluntary counselling, testing and treatment programme seems to place the red branded bank as current market leaders in this sector. Absa has also sourced insurance so that should a client fall ill and be unable to work due to an Aids-related disease their home loan instalments will be covered.
CONTACT US
Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.
Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za
www.mortgagepluscc.co.za
Banks start to ease up with bond applications
WITH banks beginning to relax their lending policies, there is support for a revival in the property market and now is the time to apply for a bond.
There should be a much-improved chance of being approved for a loan on favourable terms. Banks are again offering 100 percent loans and the current lower interest rates make it a better time for consumers looking to buy.
Before you even apply for a loan, check whether the property is affordable.
Determining the right price range is an essential first step to avoid wasting time looking at unsuitable properties.
A property finance consultant will take you through the exercise of establishing what you can afford, taking into account your specific financial requirements.
Monthly repayment affordability is generally calculated at 25 to 30 percent of joint gross income, but other criteria, including existing debt commitments, may affect the size of the loan that the bank will grant.
Remember that the hidden costs (transfer and bond registration fees) usually have to be paid up front and add a sizeable amount to the cost.
One way to ensure that the loan you apply for will be granted is to get a prequalification. Companies such as Mortgage Plus will, at no cost, prequalify you for a certain bond amount, which takes the stress out of applying for a bond once you have decided on buying a property. Another positive factor is that buyers who are prequalified are in a much stronger position to negotiate with sellers.
Bond applications may be declined for several reasons: you may not be able to afford the monthly loan repayments, or may require a 100 percent loan that would push the repayments beyond your reach.
Another critical consideration is your credit profile. This includes your employment history and consumer bureau results, which provide a picture of your debt and payment history. If the bank considers you a good credit risk, it will assess the value of the property to be purchased.
If this, too, meets all the relevant criteria, the loan is usually granted. The mortgage originator also often motivates the merits of a particular loan application to the bank’s credit manager.
To improve your credit record, cancel out-of-date credit cards and ensure that you pay all instalments by the due date every month.
To help the bank determine its risk, you will have to provide personal information such as bank statements, salary slips, a statement of assets and liabilities, a statement of your monthly expenses and information on your credit history, including whether you have ever been insolvent.
An originator can ensure you have all the correct paper work to avoid unnecessary delays.
Mortgage originators shop around and negotiate the best deal for customers for free. Obtaining a preferential rate of just 0.1 percent below prime can make a big difference to monthly repayments. But a mortgage originator must take more than just the rate into account and will structure a package to suit an individual.
To structure a package to suit an individual needs please phone (011)327-4489 or go to www.mortgagepluscc.co.za
Back to topCheap Insurance
Business Partners
Business Partners
