The purchase of repossessed property has become quite a favourable option among first time buyers. The recent increase in the supply of repossessed property has created quite an optimistic spirit over this unique opportunity for investors and first time buyers.

A good example of the benefits would be to look at a situation where a person is merely looking for a house of their own but due to a tight budget can’t afford property priced at the full market value. This potential purchaser is now able to look into buying a repossessed property at a substantially cheaper price. These repossessed properties were reclaimed by the lender due to the debtors inability to keep up with monthly instalments.

Before such repossessions, a grace period is given to the owner in order to offer the opportunity to repay the missed instalments or to approach the bank with an alternate but suitable payment plan. Should the owner still be unable to repay the outstanding amount during this grace period, the ownership of the property then falls to the bank who may resell it again.

Consider the following should you wish to purchase a repossessed property;

1) Even though a repossessed property is a favourable option, they are tricky to find. A reason for this is that a loan buyer is unlikely to disclose the fact that the property is currently going through repossession. This is done in order to uphold a certain image and to avoid the label of ‘home breaker’. Online property listing companies however, are able to provide you with an extensive list of available repossessed properties.

2) As you may already know, when looking to purchase a repossessed property it is important to remember that it may not always be in a good condition. This may be due to a shortage of money or the fact that not every property is situated in a appropriate area.

It’s a common misconception to say repossessed properties are sold at dirt cheap prices, however, this all depends on the outstanding balance still owed on the loan.

3) When it comes to bank repossessed property, two surveys are made to assess the market value. When the price is established its put up for auction where the highest bidder is the winner.

With a few simple repairs and renovations a repossessed property holds the potential to become a very profitable venture. Finding a repossessed property however, is a process that should be approached with patience and revere.

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

Home Loans

In South Africa there is a variety of different home loan options available to the home buyer. Before you start take time to become familiar with the home loan industry in South Africa by doing some research by looking at the bank’s product information in their branches or on their websites.  Home buyers also have the option of using a mortgage originator to source the best interest rate or do all the work themselves.

Choosing the best interest rate option for your home loan is very important and can make a big difference on the overall amount you end up paying on your bond. Interest is the additional fee that you pay when repaying the loan and can therefore differ from bank to bank. The higher the interest rate is, the more your loan will cost you in the long run so try to negotiate the lowest rate possible on your home loan. In order to get the best interest rate, it’s important to shop around and compare loan rates and terms before deciding on a particular home loan. Request home loan quotes from a variety of banks and finance companies, as well as online lenders. Your credit rating and the collateral that you use can also have an effect on the interest rate that you are charged on your home loan so make sure to give all the necessary information.

Home loans in South Africa can either be “fixed rate” or “variable rate” loans. A fixed rate means the interest rate charged is fixed for a specific time i.e. two years or more. This option is best when the interest rates are low or to make budgeting easier. A Variable Rate is better when the interest rates are higher, because they can go down if the interest rates go down. However this rate will also go up when the interest rates goes up

Since the introduction of the National Credit Act (NCA), there seems to be a wide variation in the banks’ lending criteria, and, in some cases, one bank will approve a loan that was declined by another bank.  In this case, it is important to shop around for the best interest rate as the banks are using different models to determine whether to grant you a loan and, if so, at what rate.

The NCA places the onus on credit providers to ensure that you can afford to repay a loan or credit agreement.  In terms of the NCA, the maximum interest rate you can be charged on a mortgage bond is the repo rate multiplied by 2.2, plus five percentage points. However, most people qualify for a mortgage bond at between 1.6 and 1.8 percentage points below the prime rate.

In practice, people who are regarded as really good credit risks (high earners with low debt and a good credit record) receive 2.5 percentage points below the prime rate, while those who are not a good risk can obtain up to four percentage points above prime. Depending on your profile, the banks may be slightly negotiable within this range.

All the banks say they will not change the interest rate you are paying on an existing home loan as a result of the NCA. Your rate will change only if it is linked to the prime rate and the prime rate changes.

With new loans, as was the case with loans in the past, the banks say the interest rate they charge you depends on your individual risk profile – how much you borrow, how much you earn and your credit record.

By choosing Mortgage Plus for a loan, you will get that continual service 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