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

SA banks, hard hit by large numbers of home loan defaults during the recent recession, are set for a much better time in the next few years because of the quality lending “books” they are building now.

That’s the word from one of South Africa’s leading mortgage originators, who says: “The home loan business the banks are writing now is probably the best they have written in the past 10 years, and we expect it to prove very profitable within the next two to three years.

“For a start, they are already evaluating or ‘credit scoring’ potential borrowers now on the basis of a one or two percentage point expected increase in interest rates next year. And while this may disappoint many, it should ensure that those who do obtain home loans now have the financial resilience to cope with the predicted rate hikes, without defaulting and running the risk of losing their homes.”

In addition, home loan rates are currently not being discounted nearly as much as during the past few years, when borrowers in good standing could quite often secure a rate that was one or even two percentage points below the prime rate.

“What is more, there is a further shield for both banks and borrowers in the fact that there are really very few 100% loans being granted at the moment. Combined with the strict lending provisions contained in the National Credit Act, the requirement now for most homebuyers to pay a deposit of at least 10% – and usually more – offers protection against the effects of negative equity for both individual borrowers and the real estate market in general.

“Consumers who pay bigger deposits also benefit in the sense that banks will grant them loans at more favourable interest rates, which saves them money.”

Finally, profitability should be improved by the fact that the banks have streamlined the acquisition of new home loan business as far as their fixed costs go.

“Overall, we see that the lenders have stopped playing so hard for market share and started to really concentrate on the quality of their home loan business. And as this shapes up, it should serve to make them much less nervous about the home loan market, and about granting new loans – although we anticipate that these will very much continue to be granted according to the ‘new rules’ and not in the freewheeling way of the past. Borrowers will be taken seriously, as valuable customers, and that’s good news.”

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