Home Loans Tips
South Africa is not immune to the current global credit crisis, and the evidence is showing in a couple of ways. First, home prices are dropping. According to statistics released by bond originator ooba, home prices have fallen 6.6 percent overall compared to October last year. In real terms, that means the averaged home priced at R803,908 last October would only be able to sell for R751,118 in October of this year.
The second indication of the poor property market is that potential homeowners are finding it increasingly difficult to get financing for their properties. Banks are being cautious in light of the credit crisis, the National Credit Act and deteriorating economic outlook. Though the rate of home loan declines were down slightly, 1.4 percent, it doesn't really dent last month's rate of 51 percent.
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 choices does a potential homeowner have in today's market? Remember that decline rates are different for each individual bank, so take the time and before giving up, try applying with other banks.
Home loan applicants must be able to prove that you can make your installment payments and that you have not been late or defaulted on any other payments for at least two years before making your home loan application. Another must, a sound credit rating. It is no longer enough just to have a steady paycheck.
Potential lenders want their patrons to be stable borrowers, with a solid history of debt payment. If you have this quality, it will be extremely helpful in your pursuit of a home loan.
If your history is not stellar, it is best to be honest. Lenders appreciate a borrower who is upfront about a rough spot in his credit history instead of trying to cover it up. Also, show that you are serious about your financial obligations by opening savings account for the express purpose of building a home deposit fund. The average deposit requirement is 10 percent, but this can vary from bank to bank, so do your research.
Make sure your monthly installment is no more than 30 percent of your monthly income. Less is preferable. Banks will not consider your application if the installment does not meet this requirement.
All in all, today's property market is fraught with frustration. 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.
If you are able to handle the payments and have a steady, sufficient source of income, you should exhaust every option when it comes to getting a home loan.
The second indication of the poor property market is that potential homeowners are finding it increasingly difficult to get financing for their properties. Banks are being cautious in light of the credit crisis, the National Credit Act and deteriorating economic outlook. Though the rate of home loan declines were down slightly, 1.4 percent, it doesn't really dent last month's rate of 51 percent.
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 choices does a potential homeowner have in today's market? Remember that decline rates are different for each individual bank, so take the time and before giving up, try applying with other banks.
Home loan applicants must be able to prove that you can make your installment payments and that you have not been late or defaulted on any other payments for at least two years before making your home loan application. Another must, a sound credit rating. It is no longer enough just to have a steady paycheck.
Potential lenders want their patrons to be stable borrowers, with a solid history of debt payment. If you have this quality, it will be extremely helpful in your pursuit of a home loan.
If your history is not stellar, it is best to be honest. Lenders appreciate a borrower who is upfront about a rough spot in his credit history instead of trying to cover it up. Also, show that you are serious about your financial obligations by opening savings account for the express purpose of building a home deposit fund. The average deposit requirement is 10 percent, but this can vary from bank to bank, so do your research.
Make sure your monthly installment is no more than 30 percent of your monthly income. Less is preferable. Banks will not consider your application if the installment does not meet this requirement.
All in all, today's property market is fraught with frustration. 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.
If you are able to handle the payments and have a steady, sufficient source of income, you should exhaust every option when it comes to getting a home loan.
About the Author:
Tom Martens is the content coordinator for South Arica's leading Home-loans portal which amongst others offers origination services for ABSA homeloans
posted by Debt Consolidation Loan at
12:44 PM
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