With more than 40% of all home loan applications still being declined in December 2009, potential homeowners may still be finding it tough to obtain financing. However, the decline ratio is expected to fall as a result of the gradual improvement expected in the local property market in 2010.

Latest figures  show that 42% of home loan applications were ultimately rejected by banks in December 2009.

According to Rhys Dyer, the current decline rates are well above the effective 20% decline ratio experienced during the heady days of 2003 to 2006, a time of strong property market conditions.

“These decline rates were, however, prior to the introduction of the National Credit Act (NCA). Our view is that the introduction of the NCA has influenced decline rates on a structural basis and it is unlikely that we will see decline rates at these historic lows again. There is however significant scope for improvement from current levels with property market recovery over the short term.”

Dyer says lack of affordability still remains a key reason for high decline ratios.

“Affordability under the NCA is measured by net disposable income. Consumers need to show sufficient net income after tax, living expenses and the repayment of other debt to afford the bond repayment. With many consumers having been hit hard by the economic recession, and the increases in the cost of living they simply cannot meet these criteria.

“Many consumers are also recovering from an overhang of historic debt and a high percentage still have impaired credit records,” says Dyer.

Dyer says that because every bank applies different credit criteria in assessing a home loan, it is essential that consumers shop around and don’t merely accept the credit decision from only one institution. Almost a fifth of ooba’s home loan applications that were declined by one lender in December 2009 were accepted by another lender.

“Further to the credit criteria, there is also the issue of pricing. Pricing between banks remains a key reason to shop around. The rates being offered to the same client may vary from bank to bank.

He says that in the current environment, using a reputable bond originator is a useful way to improve the chances of a successful home loan application.

“Bond originators can assist in shopping around to the different banks and ensure that all the required information is obtained and correctly reflected before submission of the home loan. As each bank has differing requirements in terms of their application information, bond originators have developed systems to ensure that once the information is obtained from the customer it is systematically formatted to meet each bank’s application formats and requirements. This saves the consumer from having to go through a separate and time consuming application process with each bank.”

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Mortgage Plus – 011.327.4489

The financing of your new home is vital to the successful conclusion of your offer to purchase. This can be a daunting task, but let Mortgage Plus offer you the Best Advice and provide exceptional service throughout the financing of your home loan. All this at no cost to you. To enable Mortgage Plus to process and approve your home loan finances with no delay.

The following documentation is necessary:

01	Natural Persons – Salary Earnings Copy of the offer to purchase. Completed application form (including assets and liabilities and income and expenditure statements). Copy of a suitable ID document. Latest salary advice as conformation of your earnings. Latest 3 months authentic bank statements (bank stamped) reflecting your salary deposits. Internet printed statements are not accepted.   Note: Non-Standard Bank clients who want to utilize Standard Bank Home Loan options must submit 3 months bank statements.
02	Self Employed Persons Copy of ID. Completed application form. Auditors letter confirming monthly drawings. Financial statements (IRP5 or management accounts if financial statements not available). 3 months business bank statements (6 months if available)   Note: Non-Standard Bank clients who want to utilize Standard Bank Home Loan options must submit 6 months bank statements.
03	Commission / Overtime Earnings 6 months salary slips and 6 months personal bank statements. Internet printed statements are not accepted.
04	Closed Corporation / trust / Propriety Limited Company Documentation as per natural persons for all members. Latest financial statements for Trust or CC (excluding own if self employed). CK1 and CK2 documentation / Deed of Trust. Letter of authority if one of multiple members applying. 3 months business bank statements (6 months if available). Internet printed statements are not accepted.   Note: Non-Standard Bank clients who want to utilize Standard Bank Home Loan options must submit 6 months bank statements.
05	Your Loan Consultants Will Assist You With Loan Finance, By Doing The Following: Ensure that your loan application is 100% completed together with all supporting documentation. Qualify you for the loan in terms of your gross income. Carry out necessary credit checks Advise you of all the costs relating to the transaction. Structure the best LOAN package deal to suit your individual needs. Answer all your questions that relate to the financing of your home. Assist you through the entire process of your property transaction.
At Mortgage Plus we understand that the purchase of your new home is an important decision and we aim to satisfy your requirements. Should you require further explanation or assistance at any stage of the process, please speak to Morne: 011 327 4489. www.mortgagepluscc.co.za