6 Tips for a successful mortgage application

As a young South African, buying property might not be at the forefront of your mind but with interest rates in South Africa relatively low and property prices at a realistic level compared to the recent boom, now is a great time to get onto the property ladder. And with banks granting first time home owners mortgages of up to 104%, you don’t need to spend years saving for a deposit.

When the time does come for you to apply for a mortgage, you don’t want to find out that you aren’t eligible because of a low or non-existent credit score. A bit of preparation can pay off in the long run and you should start considering what you can do now to make your mortgage application easier when you want to buy.

Make debt

A good credit rating is one of the most important factors in having a mortgage approved to finance a property. The only way to get a credit rating, ironically, is to have debt. Your overall credit rating is calculated according to a number of factors with different weightings, resulting in a score of between 300 and 800. As a general rule of thumb, your credit rating needs to be at least 640 for the banks to consider you credit-worthy and a low risk.

Then manage it well

Before you rush out and spend on credit, banks also want to see evidence that you can manage your debts well and pay them on time. So much so that the payment history on pre-existing loan accounts contributes 35% of your overall credit score and outstanding amounts owed contributes 30%.
Remember though that it is not only “formal” loans such as store cards, credit cards, student loans and car loans that contribute to your credit history. Not paying other bills such as traffic fines can also have a negative impact on your credit score.

Don’t wait, act now

Other factors that affect your credit rating are the length of your credit history, new credit accessed and the type of credit involved.
So, before buying a property, you should carefully build a good credit history by accessing appropriate debt and then managing it well.

Credit card conscious

One good way to do this is to use your credit card for expenses but then pay off the balance at the end of every month to avoid being charged interest. Another credit card-related tip is to never use more than 50% of the amount you have available to you. If you are constantly reaching your limit, this shows the bank that you are living right on the edge of your income.

Get a full-time job

Banks will insist the lender has been employed for at least a year, and will ask to see three months of salary slips, or six months of bank statements if you are self-employed.

Sooner rather than later

Property is a fixed asset that can grow substantially in value, so it can provide an important foundation for financial security in future. So, while the thought of a 20-year financial commitment might seem overwhelming to many young adults, especially if you have just achieved financial independence, there are many good reasons to get on the property ladder sooner rather than later.

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

Proving Attractive Home Loan options for First Time Home Buyers

In the highly competitive South African home loan market, Mortgage Plus is making its mark by offering first time home buyers a range of user-friendly and attractive home loan offerings as well as solid financial advice and guidance.

Launched in 2006, Mortgage Plus is a mortgage or home loan origination company that has built its reputation on offering South African home buyers top property and financial advice, as well as a selection of 5 home loan products to suit all South Africans.

Mortgage Plus’s First Time Homeowners Loan is a ’specialist’ home loan that has been designed to allow the more ‘cash-strapped’ home buyer to borrow over 100 percent of his or her home loan with no deposit required to make allowances for registration and transfer fees.

Its Variable Rate Loan links a home buyer’s base home loan rate to the national interest rate which means that as the interest rate rises or falls so does their home loan rate which is a facility welcomed by many budding SA home owners.

With its Fixed Rate Loan, a home buyers interest rate is fixed for a specified period of time, usually from one to two years, which is a great way to protect home owners against rising interest rates and ensure that their monthly home loan repayments remain constant.

Mortgage Plus’s Capped Rate Loan allows home buyers to benefit from any decrease in the national interest rate but contains a ‘capped rate’ which means that home owners know up front what their maximum interest might be, ensuring piece of mind.

Its Step Down Loan has been designed to allow a South African home owner’s interest rate to decrease during a pre-specified period (usually up to 5 years) by a certain percentage every six months regardless of interest rate rises or falls.

Together, Mortgage Plus Bond Originators home loan offerings manage to cater to most prospective South African home buyers and ensure that everyone has the same opportunity to become a home owner.

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