South African Banks’ voluntary sales programmes for defaulting debtors are growing throughout the country as distressed homeowners and financial institutions continue to seek alternatives to legal foreclosure, and home buyers increasingly opt for the significant discounts that come with these sales.

“Each bank has a different programme with names such as Quick Sell or Easy Sell and many of these are run through electronic platforms”, says Auction Alliance CEO Rael Levitt.

With the introduction of various bank distressed sales programmes, a homeowner that is struggling and cannot afford their bond repayments, agrees with the bank to sell the house on a voluntary basis before the legal process kicks in.

Levitt maintains that the reason why sales in execution, the traditional legal foreclosure channel, have dropped off is due to banks aggressively promoting their voluntary distressed sales programmes. “In the USA these programmes are called short sales and they are one of the largest sales sectors in the market”.

FNB reported a decline in the variety of houses on sheriff auction compared to the past year or two because of products that avoid the costly auction process. However, CEO of FNB Home Loans, Jan Kleynhans, believes that customers should look at these properties to find good deals. “There are bargains with houses now sold for 20% to 50% below their initial value,” he says.

According to Kleynhans, FNB sold between 100 and 150 houses a month, and has sold R4 billion worth of distressed houses since the introduction of his bank’s various voluntary distressed programmes. FNB’s non-performing home loan book is valued at about R6 billion. The other three home loan banks have varying distressed sales volumes and non-performing home loans.

“My estimate is that non-performing home loans in South Africa is valued between R25 to R30 billion, and this excludes distressed commercial properties and property developments”, says Levitt.

With 4,145 voluntary distressed sales advertised in the third quarter, the Gauteng area had more distressed sale transactions than any other metropolitan area according to Auction Alliance. These distressed sales came with an average discount of 32% and at an average price of R410,237.

The Western Cape ranked second in the number of distressed sales advertised for the second quarter with 2,434 sales, which came with an average discount of 29% and an average price of R433, 793.

According to the Auction Alliance survey, the areas with the highest numbers of distressed sales in the third quarter were:

1. Kwazulu-Natal’s South Coast

2. Pretoria East

3. Gauteng’s East Rand

4. Garden Route and Southern Cape

5. Northern Suburbs Cape Town

Distressed sales savings averaged more than 30% in the Southern Cape in areas such as Mossel Bay. Across the country, vacant stand savings averaged more than 50% with many banks offloading these at any price.

The East Rand experienced a 22% rise in distressed sales from the first quarter to the second quarter of the year, while Pretoria saw a 27% rise in these sales. The Eastern Cape and Limpopo provinces also saw significant increases in distressed sales over the quarter with 15% and 17 % respectively.

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

What Every First Time Homeowner Should Know About Home Loans in South Africa

For many first time homeowners, finding a property that meets your needs is something that may take months to achieve. Whether you are searching for a compact family home that offers the perfect place for your children to grow up in, or a new apartment in the city, the search for a property that is in the right area, at the right price, with the right

features is no easy task. In the same way, finding the right partner for home loans in South Africa should also not be something that is done in haste.

Choosing a home financing provider without understanding exactly how the process works can cost you a fortune in hidden fees, high interest rate and unrealistic payment terms. Instead, take the time to find a financing partner who understands your specific needs, who will be able to work with you each step of the way as your financing needs change.

Some of the factors regarding home loans within South Africa include:

• Interest rates – these will change over time, but to begin with you should be getting a competitive interest rate that will not break the bank. Fixed interest rates are set at the same amount over time, while variable interest rates change as your financial needs change.
• Payment terms – depending on your budget and needs, payment terms can be selected over anything from ten to 20 years. This will allow you to afford your new home without falling into serious debt, with payment plans spread out over time to ensure that you can easily make your monthly payments.
• Loan qualification – you will qualify for different sized home loans depending on your income. Couples are able to combine income, while singles have a sole income that may affect whether they qualify for a larger loan. In this way, your financial needs are carefully considered to ensure that you do not risk serious debt.
• Additional costs – it is always a good idea to find out exactly what costs you may incur for your home loan. Some providers charge an early payment penalty for homeowners who pay off their loans before the prescribed date. Others may charge late payment penalties too. Don’t be afraid to ask about all potential costs before choosing your home financing partner.

Best Tips for First Time Buyer Home Loans

While it can be a hugely stressful step to purchase your first home, do not let the daunting process deter you from achieving your dreams of home ownership. To be prepared, make sure that you have all documentation ready so that you will be able to begin the process as soon as you have found your ideal homeloan partner. Set a budget, and do not be tempted to purchase property that is not within your budget – the most effective way to ensure that you are able to finance your home is to choose property that you can realistically afford to purchase. – affordability-calculator

Mortgage Plus Home Loans makes the process as pain-free and simple, with a wide range of loan plans that suit every budget and specific needs. This allows you to focus on the excitement of finding your dream home, along with all the plans that you have to make it your own.

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