Work on your credit score
Your credit history is one of the first things that the lending institutions look at when they review your home loan application. It clearly outlines a person’s financial and credit performances in the past which holds a serious weighting as to whether or not you qualify for a loan, the amount you qualify for and the interest rate you stand to pay.
You are entitled to apply for a credit report on yourself every year from the government credit bureau, free of charge. You should carefully analyse your report before applying for your home loan so that you can take steps to improve it wherever you can. Be on the lookout for incorrect records and if there are any mistakes, write to the credit bureau in question, explaining what needs to be changed and why. Remember to send your requests through with all the necessary supporting documentation wherever necessary.

Calculate affordability
Credit providers have to perform an affordability assessment before granting credit. This process takes into account all your financial obligations, such as home loans, vehicle finance, overdrafts, credit cards, secured loans, and domestic expenditure, which are compared to the value of your assets and income in order to calculate your current financial standing. You should do your own assessment by using one of the many affordability calculators on the Mortgage Plus website. Here, you can input all your current monthly payments, debts and other expenses in order to calculate what size home loan you can afford. This is a very good exercise, as it will show you what you could possibly cut back on in order to qualify for a higher loan.
However, you need to remember that the mortgage repayment is not the only thing you need to factor in with regards to affordability. Owning a home involves various additional expenses, such as paying rates and taxes, electricity and water bills, homeowners insurance, sufficient life cover on your mortgage, as well as the cost of maintaining your property. It would also be prudent to factor in headroom for any potential interest rate hikes – you should be able to cope with a minimum of a 2% increase over the next 12 to 18 months.
Any lender needs to determine that you have had a stable income for at least two years. As such, self-employed individuals or commission earners will need to prove this aspect of their income before a home loan will be granted.

Save, save and save some more
It is essential that you improve your disposable income by as much as you can, as credit lenders will take this into account when they calculate the size of home loan you qualify for. For every R1 300 you can save on your monthly financial obligations, you will be able to increase your home loan spending power by a full R100 000. Also, being able to save a big deposit of around 20% to 30% offers the lenders assurance that you are working towards a good credit rating and that you have the financial means to meet future obligations relating to the loan. The bottom line is that the more money you have saved to put towards buying your home, the better chance you will have for being approved for a home loan.

Work with a home loan originator
In order for you application to go through smoothly, you should get all the required documentation ready beforehand. Applying for your home loan with the help of a mortgage originator instead of taking the DIY approach will greatly improve your chances of success. Mortgage originators are professionals who understand the various procedures of the different banks. They know which paperwork to submit to motivate your application, they can help negotiate the best possible interest rates and they will help you through the entire process until your home loan is finally registered. The best part is that this service is free of charge for the homebuyer.

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

If anyone thinks that banks are likely to loosen the purse strings and make home loan finance more readily accessible then they should think again judging by the last figures released by Absa Home Loans.

It says theresidential property market and the demand for home loan finance will not get any further stimulation from the interest rate environment this year, the continued low interest rates will provide some support for that market.

According to Jacques du Toit, year-on-year growth in household credit extension – including installment sales, leasing finance, mortgages, overdrafts,credit cards and other debts – increased by 6,9% in December compared with growth of 7,2% in November last year.

“The total value of outstanding mortgage balances on commercial and residential properties dropped to 4% in December compared with 4,8% year-on-year in November,” says Du Toit.

“The figures also indicate that the year-on-year growth in the outstanding balance of mortgage finance extended to the household sector came in at 4,6% in December when household mortgage balances were slightly lower at R758,7-billion,” says Du Toit.

He says that year-on-year growth in mortgage advances is forecast to rise from its current low level but growth in mortgage advances will probably remain at single digit levels (in other words less than 10%) this year.

Judging by the mortgage advances for the full 12 months last year it is clear that the banks are holding the growth in mortgage advances to less than 5%.

The figures show that the lowest month of advances was recorded in June of 3,4% and the highest levels were coincidentally, August, September and November all up by 4,8% with October recording growth of 4,7%.

Interestingly the growth in other loans and advances to private households was down to 6,9% in December from 7,2% in November according to figures released by the South African Reserve Bank. The Reserve Banks says mortgage credit fell by 0,4% month-on-month (worth R4,7-billion) while year-on-year growth was just 4%.

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