The mortgage origination value chain consists of the home buyer, estate agent, mortgage originator, attorney and the lender (bank).

1. Seller
The seller is the registered owner of the property to be sold. The seller could:
• Approach an estate agency to sell the property on his/her behalf
• List the property for sale through a direct selling mechanism on the Internet
• Sell the property directly to a prospective buyer.

2. The buyer
The buyer of a property enters into an Agreement of Sale with the seller of the property and could pay the purchase price to the seller in cash or by obtaining a home loan or mortgage through a bank. A buyer is also a person buying a stand and building a dwelling on the stand.

3. The estate agent
The estate agent is the starting point within the value proposition to the homebuyer. Although appointed by the seller, and primarily looking after the interests of the seller in terms of listing the property and finding a suitable buyer as close as possible to the seller’s asking price, the estate agent is compelled to operate and advise homebuyers within the guidelines and policies of the Estate Agency Board, the Regulatory Body for Estate Agents. The estate agent adds value to the homebuyer in finding a suitable property to satisfy the needs of the homebuyer.

4. Banks
The bank is also referred to as the lender. When the originator submits an application on behalf of the homebuyer to the bank, the bank will assess the application based on the creditworthiness of the applicant, the affordability of the loan for the applicant and the security that is offered for the loan in terms of the value of the property to be mortgaged. Based primarily on the risk the mortgage loan represents, the bank will offer the home buyer a suitable interest rate. The normal repayment period for a home loan is 20 years. After registration of the home loan, the applicant becomes the client of the bank.

5. The attorney
By law a conveyancing attorney is the only person who may register property transactions in the Deeds Office.
When there is a mortgage bond registered over a property, and the purchaser has procured a loan secured by a mortgage bond to pay the whole or part of  the purchase price, three basic types of transactions are applicable:

• The cancellation of the seller’s existing mortgage
• Simultaneously, the transfer of the property into the new owner’s name
• And also simultaneously, the registration of the purchaser’s bond

There is a fourth possibility – that the property transactions may be  in the sense that, for example, the purchaser has sold another property, and the proceeds of that sale, or part thereof, are used to pay the purchase price of the property he/she is now buying.

6. Mortgage originator
A mortgage loan originator or mortgage broker is a licensed professional who arranges mortgage financing for potential homebuyers. While a loan originator usually represents a particular mortgage company, the mortgage broker may possibly represent more than one lender. In either case, the job is to assist the borrower by beginning the borrowing process through the completion of a loan application, and gathering of the necessary documentation, such as income statements and credit reports.

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

How to get a home loan approved

Even though property prices have soared in recent years, you can probably still obtain a home loan to buy your own home if you are earning a regular salary. Here are some ways that you can get that home loan you need to become a home owner without needing an excessively high income.

Look For Special Home Loan Deals

Keep an eye out for special deals offered on home loans by the various banks in South Africa.  There are good home loan products specially designed for first time home buyers who do not have huge incomes or cash on hand to pay deposits on the home loans. Always try and negotiate with the bank on a better interest rate as even a small decrease on your interest rate can make quite a large difference on your monthly repayments. For a family on a tight budget even a R100 less per month spend on your bond can make a big difference.

You can often bargain with a home seller to get the price down to something that you are more able to afford so do not just accept the first offer as something you cannot afford. Also keep in mind that many of the cheaper properties are not always advertised so drive around in your area and look out for the “For Sale” signs in front of houses. Do this especially on sundays as this is the day most sellers choose to place their homes on show.

Increase Your Home Loan Repayment Period

You do not have to take your home loan over a 20-year period but you could stretch it over a 30-year period. This will cause your monthly repayments on the home loan to be lower which will allow you to afford a higher loan amount. On the negative side this kind of home loan will cost you more over the long run in the form of the interest you will pay.

Get a Joint Home Loan

If you cant afford a home loan on your own salary consider buying a home with a partner. Instead of looking at your personal income as a measure for calculating an amount you can afford on a home loan, banks will look at the joint gross income of the two partners buying property together. If your gross income is R4000 and that of the partner is R8000 the bank will calculate the amount that you jointly qualify for on the combined R12000 income. The bank usually will not give a home loan on more than 30% of the gross income so jointly you should be able to get a loan for R400000. If you decide to take this option make sure that you sign a legal agreement with the partner on the amount each will pay on the repayments of the home loan and how the proceeds should be spilt when the home is sold in the future.

Enter The Market With a Lower Value Home

A common mistake prospective home buyers make, especially first time buyers, are that of aiming to high. Only for a hand full of people will their first home be their dream home. It helps to get into the property market first with a lower value home and after a few years, with the increase in value of your property and promotions in your job, you will be able to afford a better home.

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