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When should you start saving for your first property?

Written on August 20, 2010 by admin in Content

When should you start saving for your first property?
http://www.realestateweb.co.za/realestateweb/view/realestateweb/en/page228?oid=63640&sn=Detail

Saving up a deposit for your first property brings great financial rewards.
Over the last couple of years, the banks’ lending criteria have become increasingly stringent, and in particular, deposit requirements have remained high. Some banks have adopted policies of only awarding bonds at a 70% loan to value. That means a deposit of R300 000 required on the purchase of a R1m property, a steep requirement for most prospective homeowners. More recently banks have changed these policies and have become more competitive.
However, the difficulty in obtaining a 100% bond is not the only reason why it is imperative to save up a deposit for a property purchase. Even if you do obtain a 100% bond, you will still need additional funds to cover the many other costs related to buying a property, such as the transfer duties and numerous fees that add up to significant amounts.

Posted via email from SA Home Loan News

Bond applicants must accept tougher rates

Written on August 16, 2010 by admin in Content

Bond applicants must accept tougher rates
http://www.iolproperty.co.za/roller/news/entry/bond_applicants_must_accept_tougher

Many “low-risk” bondholders who were given bonds at anything up to 2 percent below prime before the downturn have not yet realised that it is highly unlikely that they would now be treated the same way.
Rob Lawrence, national manager of Rawson Finance, says consumers forget that prime is just a yardstick that banks use to judge risk, and that the banks’ risk has increased commensurably. This means that the price of money, which is a bank’s trading commodity, has had to be increased.
“There has been ongoing publicity about the stricter lending criteria, but buyers who now apply for bonds and who are still earning well are understandably very frustrated when they find that their risk rating has been downgraded, and they can get either no discount or a very low discount, such as 0.5 percent on prime.

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Why deposit is essential

Written on August 15, 2010 by admin in Content

Why deposit is essential
http://www.property24.com/articles/why-deposit-is-essential/12127

“For someone who does not have the money available for a deposit, buying a home can be extremely difficult. Yes, there are a few options available to buyers in this situation. They can for instance apply for bridging finance. However, this is a short-term solution and is unviable if you do not have asset backing.
“What’s more, lenders usually charge premium interest rates on these kinds of loans, making them quite unfeasible. Sometimes, the approval of such loans can be subject to delays which can also compromise the buyer’s chance of securing the home before someone else does.

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Sanlam, Absa conclude home loans deal

Written on August 14, 2010 by admin in Content

Sanlam, Absa conclude home loans deal
http://www.property24.com/articles/sanlam-absa-conclude-home-loans-deal/12120

Financial services groups Sanlam (SLM) and Absa (ASA) on Wednesday announced the conclusion of a transaction in terms of which Absa will acquire a 100% shareholding in Sanlam Home Loans.
Sanlam Home Loans was initially established as a joint venture between Sanlam Life and Absa with each partner having a 50% shareholding.
Absa will become the sole owner of Sanlam Home Loans. The name of Sanlam Home Loans will be gradually phased out.
Anton Gildenhuys, Chief Executive: Sanlam Personal Finance Actuarial, said this decision by Sanlam was prompted by the global financial crisis in 2008 and 2009, which resulted in funding becoming more expensive and more difficult to attract.

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Self-employed? Get a bond

Written on August 11, 2010 by admin in Content

Self-employed? Get a bond
http://personalfinance.iafrica.com/banking/2571040.htm

A growing number of people who are self employed, with incomes dependant on fluctuating commissions, face huge difficulties in becoming homeowners, says Lanice Steward, MD of the Cape Peninsula estate agency Anne Porter Knight Frank.
This, she says, is because the banks, complying with the National Credit Act, have to be especially careful about lending money to people who are employed in positions which might be considered insecure.
“There is,” said Steward, “a certain arbitrariness about the concept that a self-employed person, especially one on short term contracts, is not a good security risk because many of these people are high income earners — but that is the way the banks feel obliged to act.”
If a self employed person does decide to apply for a bond he should, says Steward, “get all his ducks in a row”.

(via Instapaper)

If you are self-employed and looking for a home loan I will highly recommend that you read this article. They spell out exactly what the banks require from self-employed applicants.

Unfortunately this is not the best of news, since people working for themself for less than 3 years or without any financial statements will find it extremely hard to get a bond approved, regardless of your income.

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ABSA rejecting non-Absa client applications

Written on August 10, 2010 by admin in Content

This weekend I read an article in the Business Times about Absa Home Loans division's decision to only serve and lend to their own clients. They claim that they have a history on their own clients' banking records, and therefor they are more willing to lend money to them.

As you know, about a year ago almost all the banks had problems with bad debt and they all dramatically increased their lending criteria. This however is just one step too far I would say. ABSA had a 33% market share before, and they will surely lose market share because of this decision. Losing market share also means losing money, since they make money by lending it out.

ABSA must have weighed the pros and cons of such a move. Maybe this will reduce the risk somewhat, but they still cannot control the employment or risk profile of their own clients in any way.

I just hope this is temporary for the sake of our clients. At least we can still apply at three other banks if you are not an existing ABSA client.

We will update this site as we get news about changes to their policy.

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Save, save, save for deposit!

Written on August 5, 2010 by admin in Content

This news article on property24 explains in detail what the benefits are if you could save for a large deposit.

Save, save, save for deposit!
http://www.property24.com/articles/save-save-save-for-deposit!/12079

“Furthermore, homeowners who contribute from their own pocket to finance a property are considered a lower risk of default to the bank, which means the bank can offer a lower interest rate on the home loan. Even a 1% reduction in the interest rate on your home loan will save thousands of rands over the term of the bond. These savings, in many cases, add up to far more than the deposit amount,” says Goslett.

(via Instapaper)

One of the factors banks take into account when approving a home loan and determining the interest rate is the "loan to value" (LTV) ratio. As mentioned in the article, the lower the LTV, the better your chances of getting a rate reduction.

If you apply for a home loan on this site, I will also give you a free ecourse that shows you exactly what to do so that you can save thousands of rands on your home loan.

Posted via email from SA Home Loan News

Selling versus letting

Written on August 5, 2010 by admin in Content

Selling versus letting
http://www.fin24.com/PersonalFinance/Property/Selling-versus-letting-20100804

If a home owner is offered a contract in another city or country, he must carefully consider whether to sell or let his property, a property group advised on Wednesday. “The benefit of selling is that you make a clean break, while renting out your property means that you will have a home to come back to when the contract period is up – and that hopefully that home will have appreciated in value in the interim,” the Harcourts Africa Property Group said in a statement. For home owners with a large bond outstanding on the property, selling is arguably a better option, said CEO Martin Schultheiss.

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Buy low to beat negative equity

Written on August 5, 2010 by admin in Content

Buy low to beat negative equity
http://www.property24.com/articles/buy-low-to-beat-negative-equity/12082

If you want to avoid the negative equity “monster” that can swallow your home whole, you’ll need to do some forward planning.
So says Tjaart van der Walt, CEO of the RealNet estate agency group, who explains that negative equity is the term for when the outstanding balance on a home loan is bigger than the current market value of the property. “Amid all the positive news about the recovery of the real estate market, we should not lose sight of the fact that negative equity is what did most of the damage to homeowners during the 2008/’09 recession. And it remains a danger for every new generation of buyers,” says Van der Walt.

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Unhappiness over static interest rate

Written on August 2, 2010 by admin in Content

Unhappiness over static interest rate
http://iolproperty.co.za/roller/news/entry/unhappiness_over_static_interest_rate

The reluctance on the part of the South African Reserve Bank to drop the interest rates by a further 0.5 percentage point will be seen by estate agents as evidence that the government’s much-publicised commitment to home ownership is a little shallow, says Mike Greeff, chief executive of Greeff Properties.
“We had all come to expect a further drop in interest rates because inflation is under control and it was repeatedly said the economic recovery needs further stimulation,” says Greeff.
“Now these hopes have been dashed.
“Recent surveys have shown that 80 to 90 percent of lower-income earners are still renting and almost an equally large percentage of young adults are living with their parents, relatives or friends in conditions that are often seriously overcrowded.

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