Home Loans Tips
There is mounting evidence that even South Africa is not immune to the current credit crisis that is affecting the entire globe. It should be mentioned first that home prices are continually dropping. Statistics that were releases by bond originator ooba state that the home prices have fallen 6.6 percent overall compared to last October. Broken down into simple terms, it basically means that a house that is sold last year would have brought R803,908, would only bring in R751,118 in October of this year.
A second indication of our poor property market is that potential homeowners are finding it difficult to get financing. Banks are being very cautious because of the credit crisis, the National Credit Act and economic outlook. Even though the rate of home loan declines are down 1.4% it doesn’t really dent last months rate of 51%.
Another reason for banks to tighten their lending is the rising number of homeowners who are late on their installments. In the third quarter of this year alone, the number of loans more than two months behind rose 21.5%.
What is a potential homeowner to do in this market? It is important to note that decline rates vary from one bank to another, so take the time to try applying with other banks before you give up completely.
Obtaining a home loan is not what it used to be. Simply having a steady job will not qualify you. It is essential that you have a positive credit rating. Lenders require that an applicant be able to prove their ability to make the required payments. Be sure that you have not defaulted on any other payments in the previous two years before submitting an application for a home loan.
Lenders are looking for stability in their borrowers, as evidenced through a good record of paying of credit card debt, hire purchase obligations and any other form of debt. A history that shows you have already successfully managed a home loan will also go a long way with lenders.
If your past is not the greatest, it is beneficial to be honest. If you had problems in your credit history lenders appreciate when a borrow states the truth instead of lying. Also, if you open a savings fund in order to gain a home deposit fund, you are showing signs of serious financial obligation. Yet, dig into details because the average deposit requirements stands at 10 percent, but varies in different banks.
The maximum your monthly installment should be is 30% of your total income, and it is better if it is less. Banks won’t give you a second look if you don’t meet this prerequisite.
On the one hand, sellers are having a difficult time finding buyers and are being forced to accept lower offers, which is great news for buyers. On the other hand, potential buyers are struggling to secure financing. All in all, today’s property market is fraught with frustration.
As a potential buyer, it is really worth your while to explore every avenue to get a home loan as long as you can afford the payments and your job is stable enough to allow the commitment.
Tom Martens is the content coordinator for South Arica’s leading Home-loans portal which amongst others offers origination services for ABSA homeloans
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
Tags: bonds, finance, Home Financing, home loans, homeloans, Investment, money, Mortgage loans, mortgages, property, Property Investment
