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

Mortgage Plus have created a series of Questions and Answers about Originating, Home Loan Products, finance and more!

What Is Bond Origination?

Bond originators give you independent advice on choosing a home loan and help you obtain it without the hassle of doing all the legwork yourself – we answer some commonly asked questions.

What is mortgage origination?

Basically, it is the business of negotiating on the behalf of a prospective property owner, a home loan with a bank.

Why do I need a mortgage originator?

Because your home purchase is probably the most expensive one you’ll make in your life, the home loan itself is an im portant financial decision and the benefit to be gained from making a correct choice can amount to savings of hundreds of thousands of rands over the life of the loan.

Is choosing a home loan really that difficult?

All home loans differ from one another and each bank may evaluate your worth differently, so it is not as simple as shopping around for what appears to be the best interest rate in the market. Each bank has varying credit policies that cater for different claim circumstances. Mortgage Plus has knowledge of all banks’ products and will advise you on the type of loan that best suits you. They will negotiate with the banks on your behalf to get the best rate for that product.

I’ve heard that this service is free – how so?

Indeed, the service is free for the home buyer. Mortgage Plus receives a fee from the bank for doing the groundwork on the loan and thereby reducing the bank’s costs. The bank is, by law, not allowed to add this cost to the amount of the loan, so you won’t pay more than if you approached the bank yourself.

Isn’t it easier to just get my home loan from my regular bank?

Your bank will encourage you to keep all your finances under one roof, so to speak – but at what cost? Because Mortgage Plus originates loans for all major banks, this offers you, the buyer choice and by being able to compare various products and rate offers, you get the best home loan deal in the end.

How do I know if I’m getting good advice?

The professionalism of the originator will quickly become evident, so make sure you are dealing with someone who can explain their recommendation clearly and are credible. Check their track record and only deal with an originator that is a member of the National Association of Mortgage Originators (NAMO).

Must I accept any of the packages they offer?

No – you have not entered into an agreement with the originator, other than to give them the information they need to get quotations from the banks. You still make the final decision whether or not to accept their offer.
Once I’ve accepted their recommendation, what happens?
Mortgage Plus will submit your applications together with the relevant documentation, such as copies of your ID and salary advice, to the bank agreed on and advise you once your loan has been approved. A good originator should also keep you informed all the way through to registration and liaise with the conveyancing attorney on the loan’s progress.

Types of Home Loans

The leading banks usually offer the types of home loans listed below. These types of home loans are also used in the case when you have an existing home loan and need additional funds. Read more about Further Loans.
Your Mortgage Plus consultant will help you choose the option that best suits your needs and help you through the application process.

Variable Rate Home Loan

With a variable rate home loan, your interest rate is linked to the base home loan rate which moves up and down depending on market conditions. If the base rate decreases by one percent, so will your interest rate, and of course if the base rate increases so does your home loan rate.

Fixed Rate Home Loan

Here your interest rate is fixed for a specified period, normally between one and two years. Generally the fixed interest rate will be slightly higher than the base home loan rate when the loan is taken out. A fixed rate loan protects you from rising interest rates and gives you the certainty of knowing exactly what your payments will be. However it does not allow you to benefit from any decreases in the interest rate over the fixed period.

Capped Rate Home Loan

This type of home loan allows you to benefit from any decrease in interest rates, but has a maximum rate built in so you never pay more than the capped rate. These loans are not always available from banks, and generally the qualifying criteria are more stringent.

Remember by choosing us for a loan, you will get professional advice to make sure you are getting the best deal possible.

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