Its always a good idea to find out how much mortgage loan you qualify for before making an offer on an home , banks typically base this on your income and your current monthly expenditure which includes living expenses and debt repayments.

Before the implementation of the National Credit Act (NCA) in June 2007 banks and other mortgage lenders typically would calculate a bond based on payments of not more that 30% of your gross monthly income. In the case of a joint purchase they would look at 30% of the combined gross incomes.

This methodology wasn’t overly concerned with your other debts as the banks were comfortable that they had a first claim on any income and the debt was secured by a mortgage over immovable property.

Since the introduction of the NCA , banks and other mortgage lenders need to evaluate the prospective borrower’s ability to repay the proposed bond. They need to take into account all of your expenses and all your other debts before determining how much disposable income you have to service a bond. The result of this is that since the NCA was introduced people typically are qualifying for much lower mortgage amounts resulting in fewer home loans being granted sine June 2007.

Here are a few tips to maximise the amount you qualify for:

• Prepare a budget and evaluate your monthly expenditure, eliminate all non-essential and luxury items
• Always try and pay your debts on time , if you have a problem making a particular payment speak to your creditors
• Make a list of all you debt and rank your debt by interest rate starting with the highest to the lowest. Pay off the highest cost debt first by making additional payments, once it is settled move on to the next highest and so on.
• Because of the stricter mortgage lending requirements it is important that you have a substantial deposit when applying for a bond. If you don’t have any savings available consider setting up a savings/investment plan after settling any debts.
• Find ways to increase your income , ask your boss for a raise , work overtime or consider getting a second job – the more you earn the more bond you will qualify for
• Find out whether your employer offers a housing subsidy to employees
• Before applying for a home loan check your credit score to make sure that there are no negative items recorded against your profile. You don’t want the bank/mortgage lender to be the one to tell you about it. If there are any adverse comments take the necessary steps to correct it

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

With hundreds of mortgage products on the market, it is not always easy to know where to go to obtain the exact bond finance you need at the time and in the circumstances. That’s where the mortgage originator comes into the picture. “However, many people are unsure of exactly what services a mortgage originator should offer and what benefits they provide.

The key function of a mortgage originator is to introduce a borrower to a lender and to act as a personal consultant in an attempt to help you obtain mortgage finance for a property. “The mortgage originator will apply to and negotiate with a financial institution in respect of the home loan on your behalf”.

A mortgage originator should have a specialized knowledge of the various products and rates available on the market in order to give independent advice with the aim of obtaining the most suitable bond from the most appropriate mortgage lending financial institution for your particular needs. They should help you assess your affordability and explain fully and in plain language the material terms which you need to be aware of to make an informed decision.

“While you are not obliged to use their services, it can make the process much quicker because of their familiarity with the process, products, assessment yardsticks and requirements of the individual financial institutions. With a mortgage originator you only have to fill out one application and they request only one set of the relevant prescribed supporting documentation, such as identity documents and salary advice slips, required by the financial institutions. They then submit the application to the various financial institutions on your behalf and try and negotiate a lower rate for you. “It is generally understood that a bond originator is able to secure a cheaper rate than if you approached the bank directly as they are on a better negotiating platform. A good mortgage originator should also follow up with the financial institutions on a regular basis and keep you informed.

Once the mortgage originator receives the various quotations they should sit down and help you to assess your options, advising you of the pros and cons of each with your particular needs in view. “Essentially the final decision should be yours after weighing up all your options and taking into consideration the advice and recommendations of the M.O. Do not feel obligated to make any specific choice.”

Apart from providing you with information on the various mortgage products they should also be able to assist you with conveyancing and related costs.

The mortgage originator is usually paid a fee or commission by the lending institution with whom the loan is taken up, so the service should be free. It should not be necessary to sign a sole mandate and if they request you to sign any agreement between them and yourself make sure you are fully aware of the legal and possible financial consequences.

“Remember they do not have control over and cannot therefore accept responsibility for credit decisions or valuations made by the mortgage lending financial institutions, it is a good idea to approach a mortgage originator before you go house hunting so that you know what loan amount you will be eligible for.

Should you have any problems complaints may be addressed to the Office of the Ombudsman for Mortgage Originators which has been set up to deal with complaints against mortgage originators who are members of the National Association of Mortgage Originators.

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