If you want to buy property, don’t dally. The present favourable buyers’ market is not going to remain favourable forever. In fact, if the property, home loan  and banking industry experts are correct, the tipping point will be reached soon and when it does, the upswing could be breathtakingly quick.

Projections done by Absa Home Loans indicate that the price of residential property could increase by as much as 60% between the end of 2009 and 2014. This means that a 220m² R950 000 141m² house is likely to cost around R1.5 million in six years time.

But, there is a conundrum to solve. Although the current adverse property market conditions may have served to make your dream home less expensive, the prevailing economic conditions have made the home loan with which to fund your dream, more difficult to secure.

Fortunately, more difficult does not mean impossible. Here are five home loan tips that could prove to be of value if you decide to strike while the iron is hot.

Become credit fit: The National Credit Act made it possible for all consumers to request a free copy of their credit report from the credit bureaus each and every year. Your credit report is accorded a significant weighting during the evaluation of your home loan application: it is one of the main factors that influences whether you qualify for credit or not; it affects the amount you qualify for; and it determines the interest rate you stand to pay.

For this reason, you may want to see your credit report before the bank does. Go through every last detail with a fine tooth comb. Check whether there are items that adversely affect your rating, and be on the lookout for incorrect records. If there is anything untoward that should be amended, write to the credit bureau explaining why the changes need to be made. Remember to submit supporting documentation if you have any.

If the credit bureau in question doesn’t respond or unreasonably declines your request, you can approach the credit ombudsman for mediation. This may seem like quite a tedious undertaking, but it certainly is well worth the effort in the end.

Increase your disposable income: The criteria for whether or not you can afford a home loan have changed. The banks now consider your disposable income when they calculate the size of home loan you qualify for.

Your disposable income, which is the amount of money you have left after meeting your financial obligations every month, can be increased if you give it some thought. You could speed up the repayment of your personal loans, settle some of your other small debts, shop around to save on your insurance payments and buy a cheaper car.

For every R1 300 you save on your monthly financial obligations, you will increase your home loan spending power by a full R100 000.

Work with a mortgage originator: Securing the services of a mortgage originator is a much better idea than taking a DIY approach. The mortgage originator will look at your personal set of circumstances and be able to tell you whether you are likely to qualify for a home loan and, if you do, how much you could probably buy for.

Working with a mortgage originator improves your chances for success: They understand the idiosyncrasies of the various banks, know which paperwork to submit and how to motivate your application. Once you are approved, they will negotiate the best possible interest rates and help you through the process until your home loan is finally registered. The banks, and not you, pay for the services rendered by mortgage originators.

Obtain a pre-approval certificate: If you want to avoid disappointment, you can ask your mortgage originator to apply for a pre-approval certificate from one or more of the banks. The pre-approval certificate is an in-principle decision made by the bank to finance your purchase, and is usually subject to their valuation of the property you decide to buy.

Don’t bite off more than you can chew: Your home loan is not the only additional monthly expense you will face when buying a home. You will also have to pay rates and taxes, homeowners’ insurance and, if your existing life cover is insufficient, additional life insurance premiums. Be sure to budget for these.

You would do well to leave some headroom for further interest rate increases. You need to be able to cope with at least a further 2%, just to be on the safe side. If you want to have the peace of mind knowing what your home loan will cost for the next 18 to 24 months, consider a fixed interest rate rather than a variable one.

And remember, the journey does not end once you crack the nod from a bank. It continues and, considering that it could last for 20 years or more, becoming knowledgeable about home loans is not a bad idea.

Make a point of reading up on how you could save on the interest you pay and how you could reduce the repayment term. Also gain a clear understanding of how you should use your home loan for big ticket purchases and as a debt consolidation instrument.

Finally, remember that the mortgage industry is constantly changing, and that it is a very good practice to shop around from time to time to ensure that you are still enjoying the best possible home loan deal from your current bank.

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

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Prospective homeowners should explore their options prior to signing on the dotted line of a mortgage agreement. Probably the most critical thing to know and understand when acquiring a Home loan is to know what the various terms mean. This can be accomplished easily by asking a lot of questions and asking your estate agent to explain everything to you. Plus, some online browsing can turn up the answers to most of the questions that you might have.It’s important to look at the different types of Home loans that are available and to understand the differences among them. From a fixed rate, to a variable rate, to an interest only mortgage, the choices are many and the difference between them is big. If you don’t understand what a particular type of mortgage loan means in terms of monthly payments, as well as the duration of the payments, then you shouldn’t be signing on the dotted line.

Potential buyers should also understand the various terms or words that are employed when dealing with real estate.

If the mortgage loan that you are getting is a first time home loan, then it is the primary loan and the primary lien holder. This means that the lender of this specific loan holds the first claim against the property for repayment of the loan holder’s debt.

Home loans can be obtained at banks or with the help of a mortgage broker. Each lender assesses their own schedule of fees, offers their own range of interest rates, and their own selection of Home loan packages.

In order to qualify for a home loan, potential borrowers will need to go through a pre-qualification screening. During this stage, each borrower is expected to bring a number of financial documents to verify their information. Once they pass that stage, they will continue with the application process. Additional paperwork is completed and processed.

In order to receive approval for a home loan, the potential borrower needs to provide the following pieces of information: terms of employment, income level, level of debt, age of the applicants, and the type of home that is the intended object of purchase. Plus, the current interest rate and the size of the deposit can all influence whether or not the potential borrower is approved for the loan. The valuation of the home will also come into play as well.

When buying a home, it’s important not to bite off more than you can chew. If a homeowner fails to pay on his home loan, the lender can repossess the home and the homeowner is left with nothing, except maybe bad credit.

To apply for a loan you will have to fill out a short application form. You will then receive a FREE quote from well established, nationally recognized lenders. You do not need to decide now whether the loan is for you.

Just apply and compare the repayments to your current situation. There is no obligation on your part. If you decide that it is not for you, you simply do not have to accept the offer. You have nothing to lose and everything to gain.

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011.327.4489 morne@mortgagepluscc.co.za

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