Johannesburg – Absa’s strategy of dealing with only a single bond originator in future could boomerang.

Estate agents have traditionally always worked through their chosen bond originators, and they could not be forced to stop doing so, industry representatives told Sake24.

The bank announced that from December 1 it would accept applications for Absa Group housing loans only from bond originator Findex.

Findex is the former Bond Choice in a new guise with a significant black economic empowerment partner.

In terms of the strategy Absa would enter into contracts to work through Findex with the large estate agents.

Absa’s plan will prevent the other bond originator companies from applying for Absa home loans on behalf of prospective homeowners.

In effect, Betterbond, ooba and Mortgage Plus would in future be able to submit home buyers’ applications only to Nedbank Group, Standard Bank Group and First National Bank (FNB). In order to apply for an Absa home loan the agent would have to work through Findex.

During the past week Sake24 ascertained that none of the large estate agents had yet entered into a contract with Absa.

Samuel Seeff, the chair of Seeff Properties, says his company would stay with ooba. He said negotiations would however be initiated with Absa to resolve the situation, especially in view of the company’s long relationship with that bank.

His biggest worry was that that it would become very difficult logistically to secure the best deal for a client if one could negotiate with only one bank.

Leapfrog chief executive Jan le Roux said the company would continue to work through Betterbond.

He said that what Absa was trying to do made no sense and was anything but in the best interest of the consumer.

The only conclusion he could arrive at was that Absa did not wish to compete on an equal footing with the other banks.

Bond originators perform an important service for consumers, helping them to get the best deal for their home loan – but only if they have exposure to all banks.

In response to questions about the reason for the decision, Absa Home Loans managing executive Luthando Vutula said that Absa was expanding its external business contacts to include estate agents, and that the latter would be invited to enter into contracts with it.

Mortgage Plus will find the right deal for you. Guaranteed!.- Sake24.com

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. 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

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Saving up a deposit for your first property brings great financial rewards.

Over the last couple of years, the banks’ lending criteria have become increasingly stringent, and in particular, deposit requirements have remained high. Some banks have adopted policies of only awarding bonds at a 70% loan to value. That means a deposit of R300 000 required on the purchase of a R1m property, a steep requirement for most prospective homeowners. More recently banks have changed these policies and have become more competitive.

However, the difficulty in obtaining a 100% bond is not the only reason why it is imperative to save up a deposit for a property purchase. Even if you do obtain a 100% bond, you will still need additional funds to cover the many other costs related to buying a property, such as the transfer duties and numerous fees that add up to significant amounts.

Beyond this, however, there are substantial financial benefits to be realised over the longer term, if you can put down a deposit. The bigger the deposit you can make, the less money you have to lend from the bank at high interest rates, and the less interest you will have to pay the bank over the next 20 years. Furthermore, homeowners who contribute from their own pocket to finance a property are considered a lower risk of default to the bank, which means the bank can offer a lower interest rate on the home loan. Even a 1% reduction in the interest rate on your home loan will save thousands of rands over the term of the bond. These savings, in many cases, add up to far more than the deposit amount.

A deposit will also ensure that the monthly repayments on the home loan are lower, which improves your affordability score and allows you to apply for a higher bond amount than you could if you had no deposit.

So when should you start saving for your first property?

From the day you receive your first salary cheque. The sooner you start the better and the reason for this is what Albert Einstein called the eighth wonder of the world: compound interest. While it simply refers to earning interest on interest already earned, the snowball effect compound interest creates in exponentially growing even small investment, given time, is truly a wonder.

For example, if you save just R100 a month over 40 years with a 10% escalation, you will accumulate more than R2m. If you save R1 000 a month – ten times more – over 20 years – half the time – with the same 10% escalation, you will accumulate far less: just over R1.5m.

This is the power of compound interest – growing your money exponentially faster the longer it is allowed to work. As such, the youth have a massive advantage in terms of building wealth, because they have more time to allow the wonder of coumpound interest to work for them. It is unfortunate that so few young people realise the power they hold in their hands to secure their financial future, by saving even the smallest amount every month, and allowing compound interest to work for them.

The sooner you start saving, the bigger the deposit you will be able to bring to the table when negotiating a home loan, and the more you will benefit financially from the savings in the interest payable over the life of the bond, the lower interest rate you can obtain, and the higher value property you can afford. 

However, even if you missed the opportunity to start saving when you received your first salary cheque, it is never too late to start. Start saving right now, and don’t let another month go by in which compound interest could have been working for you! – Adrian Goslett* – 18 August 2010

By choosing Mortgage Plus for a loan, you will get that continual service to make sure you are getting the best deal possible.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. 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