Professional Home Loan Advice

Buying a home is certainly not an everyday or even frequent event for most South Africans, and many aspirant homeowners are at a real loss when it comes to applying for and obtaining mortgage finance.

“In fact, even repeat buyers may struggle with this because the market has changed so much since many of them bought their current homes, and the ‘rules’ for obtaining a home loan are so different now.

“Consequently, it’s a really good idea to seek advice and help from an originator such as Mortgage Plus before you even begin house hunting, because we do so much more for potential buyers than just process home loan applications.”

Very importantly, a good originator is able to help the prospective borrower understand how much home finance he or she is likely to qualify for, by undertaking a proper affordability assessment. This includes carefully checking bank statements, salary slips and tax returns as well as the borrower’s credit history, cash available and ability to really afford monthly home loan repayments without hardship.

“And on the basis of this assessment, potential buyers can gauge very accurately what property price range to target when they do go house hunting, so that they don’t waste time looking at homes they cannot afford, and are spared the embarrassment of making an offer only to have their home loan application refused on affordability grounds.

“In some cases, Mortgage Plus are able to help prospective borrowers improve their chances of obtaining finance by suggesting that they first save up a deposit, or perhaps take the time to repair a damaged credit record.” Other important advice available from mortgage originators concerns the size of any deposit that is likely to be required – which not only varies from bank to bank but can also depend on the purchase price of the property – as well as the total cost of the potential purchase, including transfer costs and the interest on the home loan.

“For example, on a R 1 million purchase made with a 100% loan, the transfer costs including duty, bond registration and attorney fees would amount to some R 45 000, while the interest payable on the loan over 20 years would be some R 1,2 million.

“If the potential buyer were to pay a 10% deposit, the transfer costs would only be reduced by about R 1000, but the interest payable over 20 years would be R 1,05 million – a big saving. In addition, some banks might then be willing to grant the loan at a lower interest rate, which would mean even bigger savings.”

Meanwhile, loan consultants working for Mortgage Plus Bond Originators know exactly what information and paperwork is required by each bank when an application is submitted, and can ensure that each application has the very best chance of succeeding.

“Indeed, while only about 50% of applications are initially approved by lenders, Mortgage Plus is able to get a further 16% approved by giving potential borrowers the proper advice, and by individually motivating the applications and sometimes submitting them to more than one bank.

“They are thus able to show a 66% success rate, which is especially relevant for self-employed individuals, for whom it is particularly difficult to get a loan at the moment.

And of course our help is free to the borrower, and unbiased as to any particular financial institution.”

If you would like to speak to a Professional Mortgage Specialist about your lending requirements, please phone Mortgage Plus Bond Originators on:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

The affordable sector is the lynchpin of the residential property market in the aftermath of the recession and this is unlikely to change in the near- to medium-term.

It is in this vein that First National Bank (FNB) has set a target of financing 100,000 homes in the affordable sector by 2012.

FNB has financed more than 76,000 affordable housing units since the establishment of its affordable housing finance business unit in 2002. The bank aims to finance more than 10,000 housing units by end June 2011 and an additional 15,000 by end June 2012.

Despite the economic downturn and a tough recession, FNB Housing Finance managed to grow its profit from end user finance in this market by 84% in the 2009/2010 financial year.

“The bottom line is that we focused on the quality of the loans granted than on the quantity. This enabled us to endure the hardships of the recession and limit our defaults within acceptable levels,” says Marius Marais, CEO of FNB Housing Finance.

Despite huge demand for housing in South Africa there is still an undersupply in the affordable housing market space (currently defined as houses in the R180k to R500k price range).

FNB Housing Finance has been working with government and other stakeholders to come up with solutions to address the housing backlog and increase housing delivery.

“We support government’s drive of developing an integrated human settlement. To us it is more than providing end-user finance to our customers, it is also about enabling and creating sustainable communities through the provision of quality affordable housing and to achieve this it is crucial for all stakeholders to work closely together and share best practises for the benefit of our country,” says Marais.

“As we move out of a recession, and stability returns to the property market, we see tremendous opportunities,” adds Marais.

“The rapid growth of our cities, and the increasing demand for affordable shelter, means an ongoing demand for affordable housing. We intend to hold onto our position as a major player in that space, and to ensure responsible consumers have access to the best possible housing finance solution,” he concludes.

Price growth in the affordable category has also proven that there is great scope for finance and supply in this market, although the growth in this category has also fallen victim to the decelerating trend. According to Absa’s House Price Index for August the value of small houses (80-140sqm) increased by a nominal 28,3% y/y in August, slightly down from a revised 28,7% y/y in July. In real terms, the value of a small house was up by 24,1% y/y in July, after rising by 23% y/y in June.

This is still far above the average nominal value of small, medium and large houses, which increased by a weighted 7,1% in August, down from a revised growth rate of 9,4% y/y in July.

Jacques du Toit, property strategist at Absa, told Property24 that affordability has remained one of the key factors in the property market, even with interest rates at their lowest level in three decades, and it has all to do with the financial position of the consumer.

“The household sector is still struggling with high levels of debt, with data released by the National Credit Regulator for the first quarter (Q1) of the year showing that many consumers are still battling with debt. Some further job losses in the first half of the year did not really help consumers to recover financially while consumer confidence has increased in early 2010, but has since remained unchanged up to the third quarter (3Q) this year. Some relatively strong house price growth in the 1st half of the year, together with rising property rates and taxes, continued to keep the focus on affordability.

“We are of the opinion that affordability will remain an important issue in the housing market in future.”

He says demand for more affordable properties in each segment will be noticeable, with resultant influences on price trends.

Pam Golding Properties’ MD for the Western Cape metro region, Laurie Wener, says amid tough economic times and ongoing difficulty in obtaining mortgage finance, the importance of affordability in the housing market remains paramount. “Accessible pricing remains a major obstacle to many new entrants to the housing market, and is a crucial factor for many other types of buyers, including those downscaling for retirement or wishing to upgrade to meet the needs of a growing family.” – Eugene Brink

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing . We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za