Mortgage pre-qualification – why it can help you close the deal

In the property game there are two ideal scenarios. The first is a serious seller who is happy to price their property competitively. The second, a serious buyer with a clear idea of what they want. In these scenarios the chances of matching buyer and seller is strong.

But what about the rest of the market? Here it takes a little bit extra, and a pre-qualified mortgage application in the hands of the potential buyer could make the difference.

Morne Prinsloo, Chief Executive Officer at Mortgage Plus Bond Originators, said it could be this reassurance, provided in the form of an endorsed certificate from a recognised mortgage originator or similar accredited financial services provider, which sways the seller or in a case where it looks like competing offers may shortly be made for the same property, he said the pre-qualified certificate could clinch the deal for the buyer.

Historically most banks were prepared to do a formal home loan pre-approval, which basically guaranteed that the finance would be made available to the buyer on request.

“The banks have moved away from the pre-approval service because it requires them to go through a complete mortgage application process with very little client loyalty when taking up the bond. Historically the pre-approval took as long as an application. This resulted in duplication and bottlenecks in approving legitimate bond applications and so the banks stopped this service,” said Prinsloo.

To aid and inform homebuyers Mortgage Plus Bond Originators introduced formal and certificated pre-qualification. This is not the absolute guarantee offered in a pre-approved scenario, but it does detail the financing options available to a potential buyer subject to them meeting the bank’s lending criteria. Mortgage Plus uses similar credit scoring models as the banks in issuing its prequalification certificates.

As a result the number of Mortgage Plus pre-qualified clients not being granted a bond when formal bank application is made, is minimal. Pre-qualification really does give both the buyer and the seller peace of mind.

For buyers there are a number of advantages. First, it introduces them to the process of applying for a mortgage. This is particularly useful for first-time homebuyers. They get a clear indication of what they will be required to show the banks on formal application, and do not feel intimidated when the formal application gets underway. Buyers also get a clear view of their budget range and can house hunt accordingly. Once they have found their house, the process of originating a mortgage for them is quicker as the bulk of the required information is already on hand.

For the seller a pre-qualified mortgage certificate indicates a serious buyer. It indicates the buyer’s ability to secure funding. The pre-qualified buyer will in all likelihood, be granted finance swiftly.

Many sellers lock themselves into a sale and then wait for the buyer’s finance to be approved. If finance is not granted, the chances are the serious buyers have moved on and the seller has to start the marketing of their property from scratch.

Mortgage Plus has invested a significant amount in the technology and infrastructure required to provide pre-qualification certificates.

“Our team can generate a certificate in no time at all, and we’d be happy to assist any buyers with the process,”

Among the clutter of speculative offers to sell, and less than serious buyers, the pre-qualified certificate sends a clear signal of intent.

That might be all it takes to clinch the deal.

For further information contact Morne Prinsloo on 011 327 4489 or email morne@mortgagepluscc.co.za

If you would like to know more about your home loan services and mortgage requirements please phone the Mortgage Plus Head Office on:

Attached please find the Home Loan Application Form * - Short Home Loan Application Form

0861.11.11.93

info@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Property types

Most banks subscribes to standard industry definitions for property types. This list should assist you with your mortgage application.

Full Title

Full title describes the transfer of full ownership rights to the buyer.

House – This word is used to describe a normal house.

Cluster home – This is a freehold property, usually in a development of similar houses. The group of houses usually has limited access and good security. Each house is individually owned and there is no levy to be paid, unlike sectional title.

Residential property used for business purposes – The property will be regarded as residential property for business purposes if 50% or more of the property is used for business activities.

Smallholding – A property is classified as a smallholding if it is situated in or within a 150km radius of a built-up area, does not exceed 20 hectares, and is able to be connected to a local authority water supply or has a borehole.

There must be a house on the property and your main source of income must not be farming on that property.

Sectional Title

This describes separate ownership of a unit (section) within a complex.

Mini subtype house – This is a small, sub-divided portion of a large property which is suitable for cluster housing developments.

Semi-detached house – This describes two houses that are attached to one another. They may be on separate stands and bonded individually as ordinary houses. They can also be on one stand and bonded together under one bond. The other alternative is that they are sold as separate units in a sectional title development.

Townhouse or flat – A townhouse or flat unit must be in an approved sectional title complex. The complex must only contain residential units.

Duet house – This is similar to a semi-detached house, but there are two separate free-standing units on one stand. It could also be two dwelling units attached to one another on one stand. They can be sold under sectional title.

Get more information on sectional title from our sectional title FAQs.

Vacant land

A home loan will be granted for vacant land – but only where development is intended to take place within six to 12 months.

Loan amount on vacant land

If plans are available when you apply for a loan – A loan of up to 100% of the property’s assessed value may be considered.

If plans are not available when you apply for a loan – A loan of up to 60% of the property’s assessed value may be granted.

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