How much can I borrow for a mortgage?
One of the first question everyone asks when they are thinking of buying a property is ‘how much can I borrow?’ This is not an exact science and all banks have methods to calculate affordability. Since the introduction of the National Credit Act this has become even more complicated. The most accurate method of establishing how much you are eligible to borrow is to contact a qualified mortgage broker.

Salary Multiples
A mortgage lender will lend you money based upon what they think you can afford to repay on a monthly basis. The calculation they used to use is broadly that 30% of your gross monthly income must be your maximum monthly mortgage repayment. Therefore if you earn R20,000 per month gross then your maximum repayments should be R7,000.

Under the National Credit Act, lenders now have to base your eligibility calculations on your monthly ‘disposable income’. To calculate this you need to take your gross income, less all the deductions like tax and UIF to get your Net income. They then calculate what your total monthly expenses are; groceries, car insurance etc, and finally they subtract all you month commitments to any existing debt you have such as credit card, vehicle finance, or loan repayments. The balance (if there is one) is your maximum monthly mortgage repayment.

The banks normally add in a ‘buffer’ for interest rate rises etc, so you may actually only qualify for 85% of this figure. You then need to work backward to get the actually bond amount these monthly payments will allow you to service.

A lender will look at your bank statements and your regular outgoings to check that the expenses you have declared are in line with your outgoings on your bank account. They also have access to the Credit Bureau’s information so they can check that the liabilities that you have declared are correct. If you run a tight ship with regard to your finances, you may be able to get a bigger mortgage than you would do under the traditional salary multiple guidelines. Conversely, if you’re already ‘maxed out’ with credit cards and personal loans, you may not get offered as much.

The National Credit Act (NCA) means lenders will be tightening their credit policy so as not to fall foul of the ‘reckless lending’ as laid out in the Act. This will not only mean that lenders will start using individuals net income for their calculations, but also they will look specifically at what other borrowings the applicant may have before they make a decisions on the applicants borrowing eligibility.

For a quick check to see how much you are eligible for please go to our mortgage calculators. The various lenders do vary in how much they will lend you depending on their individuals assessment of your risk.
Other income

Other Income
Lenders will take into account other income that you may have such as rental income, investment and dividends etc. Again, lenders do vary in how they view secondary income streams. Therefore you should always speak to your Mortgage Plus consultant to assess your full range of options.

As a rule of thumb lenders will take into account 50% of your rental income on a rental property. It is up to you as the borrower to prove this income. You must be able to show money going into your bank account and lease agreements. The longer the lease, the more they will value the rental income.

You can also take into account ‘contributions’ from other family members if they are living in your property. If a partner, or child is making a contribution to the ‘family finances’ then the banks will use it. Again, the onus is on you as the borrower to prove this.

Commission earner
If you are a commission earner the banks will take this into account. However, the best way to prove this to the bank is to provide six months payslips and calculate the average commission earnt.

Annual bonuses
These can also be taken into account but you will have to prove them with entries on your bank statements and letters from your employer.

Self-employed individuals
It is harder for banks to lend to self-employed individuals because it is often harder to prove the income. The better you manage your accounts (and the more accurately) the easier it is for the banks to lend to you. Proof of your income will have to be provided in the form of Audited Financial Statements, latest management accounts and six months bank statements, as well as a letter from your accountant verifying your income.

Partners / Spouse’s income
If you are purchasing with a partner or spouse then lenders will take their income into account.

Note: Remember that banks want to lend money. That is how they make money. The banks have come under considerable pressure since the introduction of the National Credit Act not to ‘lend recklessly’. Make it easy for a lender to grant you a loan by managing and recording your finances carefully.

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

Buying a home is one of the biggest investments a person will make in his or her lifetime. Because your home purchase is probably the most expensive one you will make, the homeloan itself is an important financial decision.

The prospect of owning a home is exciting, but it can also be a time of anxiety. This is a time when emotions must be kept in check, and one should make an informed financial decision. Our aim is to help you understand, from start to finish. From your first contact until your final approval of your loan, everyone at Mortgage Plus is dedicated to saving you money and getting you the loan you need. Fast and effective, without any sweat from your side.

By making the process a simple and uncomplicated as possible, AND BY SUBSIDISING SOME OF YOUR COSTS, we guarantee your total satisfaction.

When purchasing a property, there are normally two major costs involved, namely transfer and registration costs. This is where Mortgage Plus plays a major cost saving role to the buyer. We will give you a cash back bonus plus 30 % off the attorney conveyancing fee (when using our preferred attorney).

If you are thinking about a new purchase it helps to understand the options available to you which ultimately saves you money.

STEP 1: House hunting
STEP 2: Sign offer to purchase.
STEP 3: Seller accepts offer.
STEP 4: Contact MORTGAGE PLUS.
STEP 5: Financial Institution will confirm requirements.
STEP 6: Property Valuation done by bank.
STEP 7: Decision taken by bank.
STEP 8: Final approval. (Letter of Grant)
STEP 9: Registration attorney instructed to attend to the registration.
STEP 10: Customer to sign documents at 2 sets of attorneys.
STEP 11: Home loan registered in buyers name at Deeds Office.
STEP 12: First monthly instalment due within 30 days of registration date
STEP 14: Get your CASH BACK BONUS from Mortgage Plus.
STEP 13: Title deed & sent from attorney to Bank for safekeeping.

Let our extensive experience work for YOU.
Let us do all this for you FREE OF CHARGE!

Mortgage Plus : knows the business of mortgage bonds.

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