Property prices rise despite rise in mortgage declines

The average house price rose 6.8 percent year-on-year in June to R837,599 from R784,427 a year earlier.

The growth in the average purchase price amongst first-time buyers remained strong, with year-on-year growth of 12.1 percent in June.

According to the mortgage companies, the average approved bond size increased 14.3 percent year-on-year in June to R695,381, compared with R608,316 a year earlier.

The average deposit as a percentage of purchase price fell 24.4 percent year-on-year to R142,218, equivalent to an average deposit of 17 percent of the purchase price.

The average ratio of bonds declined increased marginally in June, up 1.3 percent year-on-year to 48.8 percent from 47.5 percent a year earlier, due to the higher proportion of 100 percent loans in June. On a month-on-month basis the decline ratio fell 4.1 percent to 48.8 percent from 52.9 percent in May.

The ratio of applications declined by one lender, but approved by another, increased 7.5 percent year-on-year to 24.8 percent.

“This is good news for homebuyers, as it indicates a higher probability of loan approval from another bank even if initially declined.

General sentiment had no doubt been enhanced by the successful hosting of the World Cup.

“Overall, the signs remain positive for the housing market, although we expect price growth to continue at a slightly slower pace in the second half of the year.”

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

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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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Buying Your First Home: Everything You Need to Know Before Taking the Leap

Buying your first home can be a daunting experience; with all the hype in the news about high interest rates, repossessed homes, and the near impossibility of obtaining a home loan most people are running, sprinting, towards renting a home instead of running the risks of buying one.

But even with all the negative press about the current state of the property market there is no better feeling than owning your own home. And with interest rates about to drop there is no time like the present to take the plunge. Here is everything you need to know before buying your first home …

Be Pre-approved:Nothing beats the piece-of-mind of shopping with a pre-approved bond. Arranging a pre-approved bond will minimise stress when shopping for your new home; knowing what you can afford will allow you to narrow down the search and save you the time of looking at things you can’t afford and that aren’t suitable. www.mortgagepluscc.co.za

Plan Ahead for Success:

 Before setting out to buy a home, it pays to think about your needs. Often one may fall in love with “the perfect house” only to find that the home is not in the right area or that the garden is too big to manage. If the home is for a family, the needs of the whole family must be considered – husband, wife, children, and sometimes even grandparents. Think about how many bedrooms and what size kitchen is needed; and whether having a garage is important. Do you have a dog and need the property to be fully fenced?

Very few people have the money to buy exactly what they want, so make a list of your requirements and break it down into “must have” and “like to have”. It will help you when you start looking at homes. Then think about the area where you want to live – is it quick and easy to get to work? Are there schools and shops nearby?

Monthly expenses need to be carefully budgeted before you even start looking. Owning a home not only means paying a monthly bond installment but has many new bills too. Make a list of everything you’ll have to pay – bond instalment, rates or levies, house insurance, mortgage (bond) protection insurance, electricity and water, repairs and maintenance; and make sure your budget can afford everything you have listed.

Know your Agents:

Get to know the agents in the areas you are searching in and inform them about what you are looking for and your price range. They will be able to notify you when new properties come on the market and can provide a tailor-made service to suit your needs.
Putting in an Offer to Purchase

Once you have seen a property you like, the estate agent will help you draw up an “Offer to Purchase”. This document contains all the terms and conditions of the sale, the purchase price, the payment terms, the date you will take occupation of the property, and the occupational rent.

Occupational rent is a monthly amount paid to the seller by the purchaser to occupy the property prior to the date of registration of transfer of the property into the name of the purchaser. Alternatively occupational rent could be paid by the seller to the purchaser if he/she needs to continue occupying the property for a period after registration of transfer.

If you plan to take out a home loan, the “Offer to Purchase” must include a condition that the sale is subject to bond approval being obtained within a realistic amount of time — i.e. 7 – 10 working days. Once you have confirmation that your loan has been approved, you must notify the estate agent immediately to ensure that your offer becomes unconditional and to enable the process to continue.

This condition is very important, because if you are not able to secure finance, the “Offer to Purchase” will terminate and become null in void, and neither you nor the buyer will be liable to pay any costs or penalties.

The Offer to Purchase should also include details of any unusual fixtures or fittings which are included in the purchase price, or which the seller might want to take with him when he leaves. Generally all items which are “fixed” remain in the house, but furniture, loose carpets and appliances go with the seller. This is where conflicts often arise, so it’s best to ensure any important items are noted in the contract.

Take the time to find out everything you need to know about a property before signing anything. Visit the house for a second look – you may have missed something the first time. Always express your concerns to the estate agent and ask them to assist you in clarifying any problem areas that you may have or consult an Attorney. Once the seller has accepted and signed the offer, it becomes a contract binding on both parties. However, if the purchase price is R250 000 or less, the buyer has the right to cancel the offer within 5 days of signing the Offer to Purchase. This must be confirmed by the buyer giving written notice to the seller and the sellers’ agent within those 5 days.

Applying for a loan:

As a first time home buyer there are a number of special criteria which you’ll need to fulfill in order to qualify for a home loan.
One of the most important factors to consider is what size bond you can qualify for; often this is about 25-30 percent of your salary, however if you and your partner apply for the loan jointly you may be approved for a larger loan amount.

Upon the application for your home loan the bank will consider the Loan-to-Value ratio (LTV) , which is the ratio between the home loan amount you are applying for and the value of your property. This is an important factor as the LTV percentage forms part of the interest rate calculation on your loan amount.

The maximum loan term offered by all banks is twenty years, and some banks require a life policy to be ceded to them. It is important to clarify this with your bank immediately.

 The general requirements of applying for your first home loan are the basic details of your monthly salary, your credit history and the offer to purchase.

The following criteria will need to be passed to qualify for a home loan;

- You must be 21 years or older
- Proof of six months of permanent employment or at least two years of self-employment,
- Minimum salary requirements can vary between R8 000 and R10 000 per month joint or single income.
- You’ll need to have a credit clear history – i.e. no judgments or defaults.
- Some banks may require SA citizenship.

Also Make sure you have all the following documents available.

- Copy of ID
- 3 months bank statements.
- Offer to purchase, which is the written agreement between the seller and the buyer on the purchase price of the property. Sectional Titles must submit most recent body corporation financials.
- Most recent pay slip, commission earners will need to submit 6months pay slips.

- If you’re a self employed business owner:
- 6 months business accounts statements
- 6 months personal bank statements
- a letter from auditor or accountant stating monthly income.

Taking Ownership of Your New Home:

Once all the conditions of the contract have been met and the deposit paid, the next process is the transfer of the property into your name and the registration of the Mortgage Bond at the Deeds Office. The Conveyancing Attorneys handle this part of the loan process and will contact you when the documents are ready to be signed.

The seller will also have to provide you with an Electrical Clearance Certificate, as well as a document stating that the property is pest-free. These conditions may vary depending on which province your property is situated in.

The registration and transfer process normally takes between 8-10 weeks if there are no unexpected delays.

The day the transfer is registered in the Deeds Office is the day you become the legal owner of the property. Your lender will start the insurance policy and begin charging interest on the loan and will inform you when the first instalment becomes payable. From this date onwards you are also responsible for paying rates and levies — or earlier, depending on conditions of sale agreement.

Once everything is finalised:Once all the Is are doted and the Ts crossed you can finally enjoy your home. Transform your new house into a home by personalising your space. Focus on making your home a comfortable space where you can unwind and have fun; after all you will be sacrificing a large portion of your income to stay there.

And don’t forget to think long-term; boost your future re-sale value by ensuring that you keep your home updated and looking good. Budgeting for routine maintenance and unforeseen emergencies will ensure your home stays looking as, if not more, beautiful than when you bought it.

Words by: Crystal Espin

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

Economic growth is picking up, interest rates are low and home prices are still reasonable, so many people have decided this is the best time for them to get into the property market by buying their first home.

However, says Berry Everitt, CEO of the Chas Everitt International property group, after they select an area they would like to live in and start looking at individual properties, first-time buyers often find themselves “freezing up” at the prospect of the huge commitment they are about to make.

What if they pick a property that turns out to need expensive repairs? What if the new neighbours turn out to be ghastly? What if something better comes up just after they’ve signed a sale agreement?

“Well, the first thing they need to remember is that there is no such thing as a ‘perfect’ property – for one thing, almost everyone’s home is something of a compromise between what they dream of and what they can afford.

“But having said that, every buyer also has certain non-negotiables – needs, rather than wants – and you should take the time to think about these and make a written checklist so that you can easily establish which of the homes you view has the most boxes ticked for the best price.”

Everitt says this strategy will prevent buyers from becoming distracted by nice-to-have but unnecessary features, or from being unduly influenced by “bargain” pricing, and will help them to resist any high-pressure selling of unsuitable properties.

“And most importantly, it will give you peace of mind, knowing that you have picked a home that is right for you and is thus your plum property, whatever else may come on to the market later.”

“Owning a home is like any other major commitment – you need to be mentally and financially ready for it,” says Adrian Goslett, CEO of RE/MAX Southern Africa.

Goslett explains that the high costs involved in buying your own home mean that you will need to be prepared to stay put for around three to five years.

“Except in a roaring real estate market, it usually doesn’t make sense to buy a home you will own for less than three to five years. The high transaction costs involved in buying and selling property means that you could end up losing money on the deal if you sell before your property has had time to rise in value and you have had time to pay off a bit of the loan and absorb some of the transaction costs.”

Of course, a key consideration that needs to be carefully evaluated before buying a home is whether you can afford to make the necessary financial commitment. “To make an accurate assessment, it is highly advisable to visit or call one of the many bond originators like Mortgage Plus or banks. They will help you assess whether you can afford to buy a home or not. It is critical that you be completely transparent about your monthly expenses, so that they can assist you in making a truly informed decision.

“Once your mortgage originator or bank has assessed your financial position, they will be able to tell you what you need to earn to qualify for the bond amount you require, or they will let you know how much you qualify for based on your income and expenses.”

Goslett notes that first-time buyers must keep in mind that in the majority of cases, they will also need to save a deposit of up to 20% of the purchase price of the house, plus enough money to cover the transfer and electricity connection costs as banks seldom, if ever, approve 100% home loans these days. In addition, Goslett advises that homeowners should ensure that should the interest rate increase, as is predicted for early in 2011, they are still able to afford the increased monthly bond repayments.

He explains that your credit rating is an essential component for bond approvals. “Many young people don’t realise the importance of keeping your financial records and credit ratings in order. If you have lots of late payments, have declared bankruptcy or left old debts unpaid, it will be much harder for you to be approved for a home loan. And even if you do get a home loan, your bad credit rating will mean you will more than likely have to pay a much higher interest rate.” – Eugene Brink

To apply for your home loan please go to www.mortgagepluscc.co.za or call us on 011.327.4489