Originators vital to speed up housing delivery

Housing developers will be hard-pushed to meet the huge pent-up demand for affordable homes – and create thousands of jobs in the process – without the help of mortgage originators.

So says Rudi Botha, who notes: “All eyes are currently on the so-called gap market, which is individuals or households earning between R9000 and R16 000 a month who can afford homes costing about R600 000 and less.

“And with the transfer duty threshold having recently been adjusted to exempt such homes from transfer tax and the government on the verge of introducing a mortgage indemnity fund to stimulate bank lending to this type of buyer, it should be all-systems-go to start eliminating the housing backlog.”

The trouble is, he says, that there just aren’t enough homes to meet the demand in this sector of the market, which is also being fuelled by low interest rates – “and that developers are unlikely to be able to get on and provide them without the help of originators to speed up homebuyers’ access to finance“.

Botha notes that the success of a new development generally hinges on how fast the new homes can be sold and transferred – which in turn requires that lots of “end users” or homebuyers have quick access to home loans at competitive interest rates.

“Which is where the help of originators – at no cost to the developer – becomes invaluable. In the first place, we provide major assistance in the administration of home loan applications. Our experience is that the rate of conversion in this sector is pretty low, and that there is a lot of wastage unless applicants are pre-screened. So we do all the credit and affordability checking before applications are made, and we also manage all the supporting documentation for each application.

“In addition, we can make multiple applications using a single document, which further streamlines the application process and improves the chances of each applicant being granted a loan.”

What is more, he says, there are other big benefits for consumers in having an originator on hand when buying in a new development. These include the provision of information about the “hidden” costs of buying a home and the home loan repayment process, impartial advice on the most appropriate home financing options, and assistance to obtain the most competitive interest rate possible – all at no charge to the consumer.

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

Work on your credit score
Your credit history is one of the first things that the lending institutions look at when they review your home loan application. It clearly outlines a person’s financial and credit performances in the past which holds a serious weighting as to whether or not you qualify for a loan, the amount you qualify for and the interest rate you stand to pay.
You are entitled to apply for a credit report on yourself every year from the government credit bureau, free of charge. You should carefully analyse your report before applying for your home loan so that you can take steps to improve it wherever you can. Be on the lookout for incorrect records and if there are any mistakes, write to the credit bureau in question, explaining what needs to be changed and why. Remember to send your requests through with all the necessary supporting documentation wherever necessary.

Calculate affordability
Credit providers have to perform an affordability assessment before granting credit. This process takes into account all your financial obligations, such as home loans, vehicle finance, overdrafts, credit cards, secured loans, and domestic expenditure, which are compared to the value of your assets and income in order to calculate your current financial standing. You should do your own assessment by using one of the many affordability calculators on the Mortgage Plus website. Here, you can input all your current monthly payments, debts and other expenses in order to calculate what size home loan you can afford. This is a very good exercise, as it will show you what you could possibly cut back on in order to qualify for a higher loan.
However, you need to remember that the mortgage repayment is not the only thing you need to factor in with regards to affordability. Owning a home involves various additional expenses, such as paying rates and taxes, electricity and water bills, homeowners insurance, sufficient life cover on your mortgage, as well as the cost of maintaining your property. It would also be prudent to factor in headroom for any potential interest rate hikes – you should be able to cope with a minimum of a 2% increase over the next 12 to 18 months.
Any lender needs to determine that you have had a stable income for at least two years. As such, self-employed individuals or commission earners will need to prove this aspect of their income before a home loan will be granted.

Save, save and save some more
It is essential that you improve your disposable income by as much as you can, as credit lenders will take this into account when they calculate the size of home loan you qualify for. For every R1 300 you can save on your monthly financial obligations, you will be able to increase your home loan spending power by a full R100 000. Also, being able to save a big deposit of around 20% to 30% offers the lenders assurance that you are working towards a good credit rating and that you have the financial means to meet future obligations relating to the loan. The bottom line is that the more money you have saved to put towards buying your home, the better chance you will have for being approved for a home loan.

Work with a home loan originator
In order for you application to go through smoothly, you should get all the required documentation ready beforehand. Applying for your home loan with the help of a mortgage originator instead of taking the DIY approach will greatly improve your chances of success. Mortgage originators are professionals who understand the various procedures of the different banks. They know which paperwork to submit to motivate your application, they can help negotiate the best possible interest rates and they will help you through the entire process until your home loan is finally registered. The best part is that this service is free of charge for the homebuyer.

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