When the time comes for an individual or family to purchase a home, they may be wondering how they can get a home loan. It is unlikely that the person or party will be able to pay for the entire house with cash. Yet, if they are able to come up with ten percent or a greater amount of the final sale price of the home in cash or a housing subsidy, possess a good credit rating, and have sufficient extra income to make the monthly payments, then they ought to be capable of getting a home loan for the remaining approximately ninety percent of the balance.

Mortgage Originator Services

After a person or party has signed an offering contract to buy a house, they will be given a specific and limited amount to time to come up with the home loan. The fastest and most efficient means of accomplishing this lies in a mortgage originator. Mortgage originators keep all of the information on hand regarding the various and competing home loan packages that the banks are offering. They are capable of suggesting to purchasers which bank and package might best line up with their particular financial profile. More importantly, a reputable mortgage originator will package and submit the purchaser’s application to a variety of lending institutions at once, enabling the prospective purchaser to swiftly contrast the resulting offers for the lowest interest rate, as well as the most attractive total loan deal. Since these mortgage originators are compensated by the banks for brining them business, this useful service does not cost the home buyer a penny.

Bank Requirements for Offering a Home Loan

In advance of a bank approving a loan for the use of buying a house or other property, the institution will require documents in order to review a few things. These items and accompanying documents include the following:

* The employment history and record, as well as the disposable (after deductions) income of the potential home purchaser, in order to determine if he or she will be able to afford the home loan payments on top of other existing obligations, including car repayments, living expenses, and tuition expenses. The National Credit Act requires lending institutions to be extremely careful when making any sort of loan to ensure that the borrower will not become over-indebted as a result of the loan.

* The credit report of the prospective home purchaser, to learn if he or she is in the reliable habit of paying their bills on time and if there are any judgments for outstanding bad debts.

* The property’s present market value, to guarantee that proper security exists for the loan for which the potential purchaser has made a request. In general, a bank would be happier if the property was valued at a greater amount than the loan amount requested at the beginning, and if it was projected to increase with time. Because of this, it proves to be much more challenging to obtain a loan in any locale where the values have been declining or simply staying the same. This is true even assuming that the potential purchaser has a terrific credit history, as well as a high disposable income.

* The presence of a good deposit. Banks are always more satisfied if a potential home purchaser is able to put down a full ten or twenty percent deposit, since it demonstrates that the purchaser is sufficiently committed to the purchase to tie up a portion of his or her own capital. A deposit also helps to guarantee an appropriate loan to value (LTV) ratio – this signifies that there should be significantly greater value inherent in the property than the amount which was loaned by the lending institution.

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

Then build up to your dream home.

Most people who are shopping for a home have something specific in mind, but often what they can afford to buy doesn’t match the mental picture.

When looking around for a home these days, buyers often have to make some kind of compromise between price and the home’s features. We would all love to be able to buy our dream home, or even build it from scratch so that it suits our requirements perfectly. However, many are not in the financial position to do this.

Bearing the current mortgage market conditions and affordability factors in mind, coupled with the fact that the interest rates are set to increase this year, possibly even sooner than many think, the best place to start is to buy small and then build up to your dream home.

While now is a good time for buyers to get into the property market, they have to be realistic about what their money can buy. Although first time buyers may not be able to start out in their dream home, they can still enjoy the benefits of homeownership in a more affordable starter home.

Accommodation requirements change over time, and therefore, young couples or up-and-coming executives or any first time buyer for that matter should not be afraid to start off with a modest home or apartment that will serve their needs well for a few years as well as fit into their budget.

The best place to start paring down the must-have features is to make a list of all the features you would want in your dream home like a home theatre, swimming pool or large entertainment area, for example. Keep that list to work towards in the future and make a separate list of all the features you feel you could not live without like a certain number of bedrooms, security etc.

While the features you cannot live without may not be conducive to a space that is, for example, ideal for large-scale entertaining, remember that a starter home or apartment will come at a much smaller price tag. Added to this, after a few years, you will have acquired some equity in the home, making it easier for you to move up to a bigger, more accommodating space when you sell. In addition, the less money a buyer spends on a home now, the smaller the deposit that will be required for payment upfront.

While buyers may need to be negotiable on certain features of a property in order to accommodate their budget, here are some pointers that can minimise the discrepancy between dream home and starter home and help buyers fast-track their dream home purchase:

1. Start saving for the deposit before you start shopping for a home

The more you have saved up as a deposit, the better your chances of getting a good finance deal

2. First buy a small house with a lower bond

Your first house probably won’t be your dream house, but it can be a good place to start working towards it.

3. Save extra money for other home expenses

Buyers would be wise to have a little savings to draw on to help them pay for items such as new paint, additional furniture and any maintenance or repair work that needs to be done. Ideally buyers should have approximately 5% of the value of the house saved for these costs.

4. Be ready for the worst case scenario

Prepare yourself financially for any worst case scenario. For example, with interest rates set to increase, budget for around 2% increase over the next couple of years and build your financial plan around that number. If things turn out better, you’ll be ahead of the game.

5. Pay off your bond as quickly as possible

It would be ideal for buyers to budget for larger repayments than the minimum required on their bond each month or to pay in lump sums as and when they receive bonuses and the like. Paying off your bond faster can reduce the amount of interest you pay, and if you hit hard times, you will have paid in enough to be able to negotiate terms with your financial institution.

In the current market, buyer affordability is all about working smartly with your money and building up your resources to enable you to afford that dream 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