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

How much home loan is right for you?

One of the biggest attractions of an investment in property is the fact that it is relatively easy to gear the purchase – that is, to use someone ease’s money to cover most of the purchase cost.

Lenders are happy because their loans are secured by bricks and mortar assets and, for the borrower, there is always the chance of a quick gain from rising property prices.

Consequently, borrowers are often tempted to go for the highest possible gearing ratio, with a low deposit and a high proportion of the property cost borrowed.

“But borrowers need to consider that a bigger deposit generally means a better chance of a home loan at the most favorable interest rate, and that the loan can be paid off or at least reduced more quickly – which means that the property owner will have a bigger capital gain when the time comes to sell.”

Before they go house hunting, potential buyers also need to determine what size loan they themselves feel comfortable about repaying.

“Financial institutions will determine the maximum they are prepared to lend based on the borrower’s credit record and current income and debt commitments, and with interest rates currently so low, borrowers may well find that they qualify for bigger loans than they anticipated.

“This does not necessarily mean, however, that they should immediately opt for a more expensive property or a higher gearing ratio. Determining what size loan is right for you remains a personal decision and should take into account your overall investment strategy as well as the property in question.”

The buyer of a newly built property, for example, may need less cash to cover transfer costs or improvements and be able to put down a bigger deposit, while the buyer of an older home may decide to take a bigger loan and keep some cash in hand to cover the costs of repairs and renovation.

“In general, though, it is good advice to put down the biggest possible deposit and keep the amount borrowed to the lowest level.

“And the final decision should only be made after careful consideration of the probable future trend of interest rates and after shopping around to ensure the best possible current rate on the loan.”

Here’s some calculators to help you make the right decision:

Affordability Calculator

Bond Status Calculator

Increased Installments Calculator

Minimum Income Calculator

Monthly Payments Calculator

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