Determine What You Can Afford With A Home Loan Calculator

It’s clear that every family should really have a home of their own. This is one of the most fundamental dreams of almost every couple when they start to build a family of their own, and that’s to buy their own house within a specific time frame. It is very important that these considerations are always kept in mind so that you are able to position yourself and your money to be geared towards this goal of buying a home.

The difficulty comes when you are thinking about a Home Loan and need to calculate how much you can actually manage to pay in line with the income that both you and your partner are making. The home loan calculator can be your best tool to organize your finances, and to find out exactly where you stand well before you jump into a loan with your bank or the lender as they work to give you the loan.

There will probably be plenty of appealing words and sales tactics these home loan consultants will use to convince you to take advantage of the loan services that they are extending to you. You should recognize that loan companies are earning revenue from the loans that they make, so you have to be aware that not all sales pitches that they deliver are to your benefit.

The initial factor that you need to find out for yourself is the amount of loan that you are able to afford to borrow. This home loan calculator tool offers you the very best estimation of the loan that you can take out determined by your income and expenditures. Your monthly cash flow will actually identify exactly how much remains for your mortgage payments. It is going to provide you an honest and accurate income expenditure worksheet which is almost like having your own private accountant right next to you advising you about your best financial moves.

It’s pretty common that interest rates won’t be stable for a prolonged time period, so it is advisable to have a buffer for this scenario which the home loan calculator can easily calculate for you. It is also possible that you can make advance payments for the loan that can allow you to build up equity in your property more quickly, and you will additionally be able to calculate the adjustments that will be made to your loan standing.

This adjustment will definitely have an effect on the length of your amortization period if the loan interest rate is fixed, however there are some institutions that are prepared to reflect the advances you make which reduces the overall amount of the loan and will lower the interest as well. It is most effective to be ready with this information in advance to make sure that you will know your negotiating strength.

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

Home loans up as banks relax lending rules

At the height of the property boom in 2006, South Africa’s four major banks were approving an average of more than 30 000 new home loans every quarter.

During 2009 this number had dropped to well below 8 000 as banks tightened lending criteria considerably in response to the global financial crisis, as well as factors such as interest rate increases, high household debt ratios and the effect of the National Credit Act.

However, with sharp cuts in the repo rate over the past couple of years, the prime lending rate has dropped to below its 2006 level and, according to property analysts, all indications are that banks have been slowly relaxing their lending criteria again. The result is that the number of new home loans approved is on an upward trend again, having increased by 10 percent since 2009.

Mortgage Plus recently completed a study of the number of home loans approved per quarter and loan-tovalue ratios of the four major banks – Absa, Standard Bank, FNB and Nedbank – from 2006 to the first quarter of 2011, to assess whether the strict lending criteria applied over the past few years since the economic crisis have eased.

“There is a slow and cautious recovery and there has been a slight drop in the first quarter of 2011, with fears of a double dip recession being mooted. But an upward trend in new lending for the residential market indicates that banks are developing more of a desire for risk,” says analysts .

“Boosting indications that lending criteria have relaxed is the fact the loan-to-value (LTV) ratios are on a similar upward trend. After dropping from an average for all banks and all market segments of almost 90 percent in 2006 to just 79 percent in 2009, they have climbed back up to an average of 82 percent since the first quarter of 2010.”

She says there is a significant difference in LTVs, however, once these are assessed in terms of market segment. Poorer households are accessing home loans of over 90 percent LTV whereas the LTVs for the comfortably off and super-wealthy are around 80 percent and 75 percent respectively.

“A number of factors account for this trend. The first is affordability – it is often simply the case that comfortable and wealthier buyers have cash to put down deposits and have often sold previous homes at a profit, whereas those buying in poorer areas may not have savings or the profits from the sale of a home to invest.

“However, it should also be considered that much of the bad debt on the banks’ books after the downturn in property values and rising interest rates caused many homeowners to default, came from the wealthier sector and higher-priced homes. Also, there has been pressure on the banks to contribute towards South Africa’s low-cost housing backlog by making home loans more accessible to lower income earners.

“There has been comment from the property sector that the strict lending criteria are a major factor constraining house price growth, and that in light of low interest rates this approach may be too conservative – creating something of a buyer’s market,” says Ivins.

However, she says, there is clearly light at the end of the tunnel.

“Interest rates are low, home loan accounts are performing better and lending criteria should become more lenient, which should stimulate prices and demand as household debt comes under control and banks resolve the distressed property sales and properties in possession still on their books.”

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