Absa’s plan to seize more lower-income earners.

CAPE TOWN – Thousands of households in the low-income bracket will now be eligible for a 110% bond through Absa’s recently launched MyHome product. Those households earning less than R15 142 can now buy a property without paying a deposit and bond costs will be included in the bond. (This is normally about 4% of the purchase price of the property). Borrowers taking advantage of the product will receive the added benefit of an HIV/Aids voluntary counselling, testing and treatment programme.

A household income of R15 142 will qualify buyers for a maximum loan of R450 000 with a monthly instalment of slightly more than R4 500.

Luthando Vutula, managing executive of Absa Home Loans, says the majority of income earners in the country fall into this bracket including most civil servants, teachers, nurses etc. Vutula emphasised the support offered for HIV/Aids sufferers as part of the product. Absa has sourced appropriate insurance so that home loan instalments are covered should a client be unable to work due to an Aids-related disease.   

While anyone in that income bracket is eligible for the package, the product is aimed at first time buyers and the package has a specially designed borrower education programme for new owners. The programme teaches home loan customers about all aspects of homeownership.

The 110% loan was previously available to those household earning up to R11 000 a month. By increasing that amount to just above R15 000 they hope to give more people the opportunity to own a home. Vutula expects the demand to be large and says their main concern is finding stock to satisfy this demand. He also expects this incentive to give the property market a boost. 

“Absa has recently intensified its focus on the affordable-housing market. The plight of many lower-income earners’ inability to access housing is well recognised within the bank. In fact the bank has been investigating for a number of years a guarantee mechanism to help lower-income earners afford bonds. This is based on a similar methodology to the one mentioned by the president in his state of the nation address,” said Vutula.

With the MyHome product and an expected R1bn of guarantees to be provided by government, Absa believes it can commit to provide about R20bn for end-user financing by 2014. Absa has partnered with a French Development Bank, Agence Française de Développement, to secure 20% of the loans with Absa securing the remainder.

The project is part of the Government’s Breaking New Ground (BNG) programme, which seeks to provide affordable housing through an integrated approach. All housing projects are designed to accommodate schools, health facilities, public spaces, religious facilities, industrial and commercial opportunities. The aim is to encourage a quality work-life-play environment with integrated communities.

CONTACT US
For more assistance with regards to Applying for Home Loan Finance .
Email: morne@mortgagepluscc.co.za
Ph: 011.327.4489
or Complete This Online Form

Home Loan Types
There are several types of home loans available from the major banks in South Africa. Below we have listed a few of the different options, but for more details and advise, speak to one of our Home Loan Originators.

First time buyers Home Loan
If you have never owned a property or had a home loan before, a special home loan is available, whereby the banks will lend you more than 100% of the property value. This will allow you to include the transfer and registration costs into the home loan, making it easier for you to enter the property market. No deposit is required with this option.

A Variable Home Loan
This is just a normal home loan which is given at the negotiated interest rate. Home Loan rates are always negotiable, and are generally affected by the amount of the loan taken out. The smaller the loan, the less chance you have of getting below the prime lending rate. With this type of home loan, if the interest rates increases by 1 percent, your home loan rate will increase accordingly. If the interest rate drops, so will your home loan rate.

Fixed Home Loan Rate
With this type of home loan, your interest rate is fixed for a period of time. Usually for one or two years. One thing to bear in mind with this option, is that the interest rate will be slightly higher that the current home loan rate. One good advantage is that it protects you from rising interest rates, so for that period of time you know what your bond repayments are. The only downside is if the interest rates drop, your home loan rate will stay unchanged – thus costing you more at the end of the day.

Capped Home Loan Rate
With this type of Home Loan, your interest rate is capped at a maximum rate of interest for a period of time, so you will never pay more than the capped rate. If the interest rates increase, you will never pay more than the capped rate you have negotiated. A good thing about this option is that you will enjoy the benefits if the rates decrease. Please note – this type of  Home Loan is not always available, and certain criteria is required before the Banks will approve your application. The Types of Home Loans offered by South Africa’s leading Banks!

For your convenience we have put together some information from South Africa’s 4 leading banks. Although our consultants will give you all these options, we believe it will be useful to you, as you will know what is available to you.

Absa Bank
First National Bank
Nedbank
Standard Bank
Sanlam Home Loans
Sa Home Loans

CONTACT US
For more assistance with regards to Applying for Home Loan Finance .
Email: morne@mortgagepluscc.co.za
Ph: 011.327.4489
or Complete This Online Form

Smart Bond is a housing finance solution for applicants earning a monthly household income of R15 000 and below. With Smart Bond, approved customers are able to enjoy 100% bond finance, i.e. there is no deposit required.

More about: Smart Bond Overview

Why do I need this?

What can I do with this?

What will it cost?

Do I qualify?

To qualify for Smart Bond, the following is required:

• You need to be a South African citizen, formally or self-employed
• Your salary/income must be paid into a bank account
• You must not have had judgments and/or defaults of more than R1 000 against you in the last 12 months
• The property you intend to buy must be acceptable for lending purposes
• Your bond instalments must be paid via a debit order or payroll deduction facility

You should still be able to afford your bond instalments, including the following:

• Current expenses and other monthly debt instalments
• The new expenses relating to the new home you are buying

You can get this at:

• MORTGAGE PLUS cc
• www.mortgagepluscc.co.za
• 011.327.4489
• info@mortgagepluscc.co.za

What do I need to do?

Complete Smart Bond application form and hand it to the consultant / fax it to 086 560 1224 together with the following documentation:

• A copy of your valid Identity Document*
• Your latest salary advice/pay slip*
• 12 months’ bank statement if you are self-employed and not banking with FNB
• Details of the property you are buying

*For you and your co-applicant where applicable.

Legal:

Once your bond has been approved, you will be required to sign a loan agreement that stipulates the conditions, requirements and responsibilities pertaining to you and the bank.