Applying for Mortgages successfully has becoming increasingly difficult. With a worldwide financial downturn, the banks are clamping down to try to decrease their losses. With stricter procedures, many individuals are struggling to get the needed finance, either for buying a new property or a further bond on an existing property. So for individuals that need to apply for a mortgage, there are some steps they can take to increase their chances of an approval.

No. 1

Make sure you qualify

This is especially important if you are purchasing a new property. First find out what amount you can qualify for on a mortgage loan. Stay within this amount. A guaranteed way to have your application declined is by applying for more than you qualify for. The banks are not lenient with regards qualifying clients, and will not consider your application further.

No. 2

Mortgage Affordability

Go through your budget and see how much you can afford to pay on a bond. And be reasonable when doing this. If you can’t prove to the bank that you will be able to afford this new expense, they will say no. By granting Mortgages their clients can’t afford, the bank is running a big risk of not getting their money back. This is a risk they are not willing to take.

No. 3

Have a good credit/payment profile

Your credit profile is the first thing the bank will look at. From how you have serviced your existing commitments they will draw conclusions, and decide whether they feel you will meet your new commitments. So make your full payments on time. Too much debt can also affect your application. So if you can pay something off, this can help with both your exposure and affordability.

Approved Mortgages are not something impossible. With a bit of planning and common sense you are very likely to be successful with your application.

If you feel like it is too much to tackle an application on your own, there are professional mortgage consultants that can assist you.

If you want more advice I am happy to spend some time with you and answer any questions you have about choosing the best Mortgage for you. – Morne Prinsloo

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

Finance Minister Pravin Gordhan’s announcement that the threshold at which transfer duty applies will increase from R500 000 to R600 000 is welcome news for the property industry, particularly the residential market, which has been depressed since 2008, David Warmback, a partner at Durban-based law firm Shepstone & Wylie, says.

This year’s Budget is the first time in five years that property transfer duties have been adjusted. The new rates, effective from February 23 this year, are:

* You will pay no transfer duty on property with a value of up to R600 000;

* On the value between R600 001 and R1 million, the duty is three percent of the value above R600 000;

* On the value between R1 000 001 and R1.5 million, the duty is R12 000 plus five percent of the value above R1 million; and

* On the value at R1 500 001 and above, the duty is R37 000 plus eight percent of the value exceeding R1.5 million.

Gordhan said in his Budget speech this week that the sliding scale at which transfer duty is levied will also apply to companies, close corporations and trusts. Previously, the sliding scale applied only to individuals, whereas companies, close corporations and trusts paid transfer duty at a flat rate of eight percent.

Warmback says although transactions in the commercial and industrial property sector are often subject to VAT (transfer duty does not apply if the seller is a VAT vendor), smaller businesses that buy property from a non-VAT vendor will benefit from the new transfer duty rates.

“With the stagnation of property prices over the past few years, the change to transfer duty should bring welcome relief to those in the property market – not only first-time and low-income home-buyers but buyers in higher price ranges as well,” Warmback says.

Jacques du Toit, the senior property analyst at Absa Home Loans, says the decrease in transfer duty rates is an attempt by the government to promote homeownership and to address the affordability of housing, especially among the lower-income population.

“This, together with government’s housing subsidy and the banks’ mortgage lending criteria for low-income and first-time property buyers, will support the lower end of the market.”

Du Toit says that in the absence of further interest rate cuts expected in 2011, the lower transfer duty and expected higher level of economic growth should support the residential property market this year.

Gordhan also announced that the government is exploring establishing a savings scheme that will provide first-time homeowners with a deposit as an alternative to the exemption on interest earnings.

Mortgage Plus offers a wide range of advice on different bond options and further advice on the above. Please call us for further information on:

Complete this short form online

Call us on 011.327.4489

Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za