Mortgage pre-qualification – why it can help you close the deal

In the property game there are two ideal scenarios. The first is a serious seller who is happy to price their property competitively. The second, a serious buyer with a clear idea of what they want. In these scenarios the chances of matching buyer and seller is strong.

But what about the rest of the market? Here it takes a little bit extra, and a pre-qualified mortgage application in the hands of the potential buyer could make the difference.

Morne Prinsloo, Chief Executive Officer at Mortgage Plus Bond Originators, said it could be this reassurance, provided in the form of an endorsed certificate from a recognised mortgage originator or similar accredited financial services provider, which sways the seller or in a case where it looks like competing offers may shortly be made for the same property, he said the pre-qualified certificate could clinch the deal for the buyer.

Historically most banks were prepared to do a formal home loan pre-approval, which basically guaranteed that the finance would be made available to the buyer on request.

“The banks have moved away from the pre-approval service because it requires them to go through a complete mortgage application process with very little client loyalty when taking up the bond. Historically the pre-approval took as long as an application. This resulted in duplication and bottlenecks in approving legitimate bond applications and so the banks stopped this service,” said Prinsloo.

To aid and inform homebuyers Mortgage Plus Bond Originators introduced formal and certificated pre-qualification. This is not the absolute guarantee offered in a pre-approved scenario, but it does detail the financing options available to a potential buyer subject to them meeting the bank’s lending criteria. Mortgage Plus uses similar credit scoring models as the banks in issuing its prequalification certificates.

As a result the number of Mortgage Plus pre-qualified clients not being granted a bond when formal bank application is made, is minimal. Pre-qualification really does give both the buyer and the seller peace of mind.

For buyers there are a number of advantages. First, it introduces them to the process of applying for a mortgage. This is particularly useful for first-time homebuyers. They get a clear indication of what they will be required to show the banks on formal application, and do not feel intimidated when the formal application gets underway. Buyers also get a clear view of their budget range and can house hunt accordingly. Once they have found their house, the process of originating a mortgage for them is quicker as the bulk of the required information is already on hand.

For the seller a pre-qualified mortgage certificate indicates a serious buyer. It indicates the buyer’s ability to secure funding. The pre-qualified buyer will in all likelihood, be granted finance swiftly.

Many sellers lock themselves into a sale and then wait for the buyer’s finance to be approved. If finance is not granted, the chances are the serious buyers have moved on and the seller has to start the marketing of their property from scratch.

Mortgage Plus has invested a significant amount in the technology and infrastructure required to provide pre-qualification certificates.

“Our team can generate a certificate in no time at all, and we’d be happy to assist any buyers with the process,”

Among the clutter of speculative offers to sell, and less than serious buyers, the pre-qualified certificate sends a clear signal of intent.

That might be all it takes to clinch the deal.

For further information contact Morne Prinsloo on 011 327 4489 or email morne@mortgagepluscc.co.za

If you would like to know more about your home loan services and mortgage requirements please phone the Mortgage Plus Head Office on:

Attached please find the Home Loan Application Form * - Short Home Loan Application Form

0861.11.11.93

info@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Bond applications reached their highest level in three years and bond approvals were at the highest value since October 2008 according to figures released.

The statistics showed that the average number of bond applications in March was 36% higher that the average monthly number of applications in 2010. However, the figures represent just 36% of the applications recorded when the property market was at its peak in May 2007.

Saul Geffen, says that the organisation has experienced consistent month-on-month growth in applications for mortgage finance since the beginning of the current year.

“February was significantly higher and March was even better than that,” he says, adding that expected the number of bond applications to continue increasing over the next few months.

He says that the reduction of interest rates – which have fallen by 650 basis points since 2008 – was certainly a contributory factor. “Interest rates are at a 30-year low and this has improved affordability of homes for thousands of people,” he says.

He points out that the low interest rates, improved affordability, subdued property price rises, low inflation rates and real wage growth combined to create a more favourable environment for homebuyers.

“The relaxation of the lending criteria by some banks has contributed to the rise in applications and approvals because the ability to obtain financing remains one of the biggest drivers for the property market,” he added.

Meanwhile, First National Bank suggest that the South African rental market has remained relatively flat for the first quarter of this year but available data suggests there may be some improvement in the demand for rental accommodation.

Property strategist John Loos says it is difficult to determine the level of rental demand in the current economic cycle but household financial pressure could be a positive factor for the rental market because it could increase the appeal of renting for certain households.

He says that the percentage of home sellers who are looking to downscale – mainly because of financial pressures – remains high at about 22% of the market and many sellers are opting to rent a property rather than buy something at this stage.

Loos says that the average rental for flats in major cities has increased with a year-on-year increase of 16,2% for the fourth quarter of last year.- property24.com

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