Banks remain cautious in home loan lending
http://www.sacommercialpropnews.co.za/property-types/housing-residential-property/3565-banks-remain-cautious-in-home-loan-lending.html
]]>In spite of the interest rate being at a 33 year low, banks remain very cautious in terms of granting home loans with all information submitted to them being thoroughly analysed to ensure the applicant’s affordability, says Kim Pistor, legal advisor and conveyancing manager for Rabie Property Group.
Pistor said while it was relatively straight-forward to confirm the monthly earnings of salaried individuals, the same cannot be said for those who are self-employed. “In these cases supporting documentation is a key element to a successful mortgage application with the banks requiring a financial history of the preceding two to three years.
“These applications usually take longer to obtain bond approval as they are often initially declined due to the various banks tight criteria related to self-employed individuals. It is often not the client’s own bank who eventually issues an approval and it is for this reason that the services of a mortgage originator are beneficial,” says Pistor.
There could a variety of reasons, why you, the homeowner, opt for mortgage refinancing. It ranges from reducing the rate of interest, shorten or lengthen the term of the loan, shifting from an adjustable rate mortgage (ARM) to a fixed rate mortgage (FRM) and vice versa. Aside from these, you sometimes opt for mortgage refinancing so as to tap your home equity to make some big purchases and for consolidating debts that you owe. Here discuss about the various reasons to take out a refinance mortgage.
To reduce the rate of interest
One of the main reasons to opt for mortgage refinancing is that it reduces the rate of interest. In other words, your monthly repayment amount gets reduced so that the mortgage loans become more affordable to you. As a thumb rule, it is said that if the rate of interest can be lowered down by at least 2%, it makes good sense to opt for mortgage refinancing. Lower rate of interest does not only help you save money, but it also helps you build equity in your home.
To change the term of the mortgage loan
If you want to pay off the mortgage loan in a shorter span of time, you can do that through mortgage refinancing. Again, if you face difficulty in making the monthly mortgage payment, you can reduce your monthly payment amount by increasing the term of the loan. This somewhat eases the pressure of making a very steep monthly mortgage payment.
Shifting from ARM to FRM and vice versa
While the initial rate of interest associated with ARM is less than the rate of interest associated with FRM, but subsequently the rate of interest associated with ARM may rise with every rise in the market rate of interest. In this situation, if you are into ARM, it makes sense for you to switch to the stability of a FRM. On the other hand, if you are into a FRM, and find that the market rate of interest as well as the rate associated with ARM is substantially lower than the rate of interest associated with FRM, you may opt for switching to ARM. However, this is possible only through refinance mortgage.
Apart from the above mentioned reasons, you can take out a mortgage refinance for few other reasons too. If you use mortgage refinancing carefully, it can also serve as an excellent tool to contain your debt. Again, with low monthly repayment, you can build up equity in your home much quickly.
]]>Property Transaction Kit
http://thepropertymag.co.za/industry-news/3127-new-property-transaction-kit.html
]]>Dianne Brock, the new general manager of the Western Cape Institute of Estate Agents, has recommended a new computerised property transaction kit.
The aim of this kit is to facilitate the sale and transfer of property in compliance with the stringent criteria of the new Consumer Protection Act.
The new kit, said Brock, covers every aspect of a property deal including the valuation, the role of the conveyancing attorney, the standard sale agreement, the title deed and the Surveyor General’s diagram of the property. Also included are the body corporate and homeowners’ association rules, building plans, the zoning certificate, the house inspection report and the beetle, electrical, plumbing and gas certificates, as well as a short legal section on dispute resolution. This encourages the insertion of a mediation of arbitration clause in the sale agreement and has recommendations on how to insure against litigation costs.
Absa lends up to 100 percent home loan
http://www.property24.com/articles/absa-lends-up-to-100-percent-home-loan/13990
]]>Absa says it is still giving 100 percent loan-to-value to would-be home buyers even in this market but only if they qualify.
According to Sifiso Shongwe, managing executive of Absa Home Loans, loans are being granted across the board to applicants who qualify - meaning they have a good credit rating.
“Since the National Credit Act came into effect, the dynamics have changed and as banks, we have to exercise responsible lending,” says Shongwe.
Foremost, you must completely comprehend that you are negotiating from a position of strength. Many property owners are in a financially distressed state, that is, they are desperate to sell. Recognize that the seller has to dispose of this particular property while you can buy any property on the market. Let the prospective seller understand that you are willing to walk from this deal and you will immediately have the upper hand.
Make the seller understand that any deficiencies in the property are his problem and the remedies should be reflected in the price. Many owners want to dispose of a property because of undisclosed headaches. Correctly appraising and inspecting a property should be paramount in the due diligence associated with a property.
Feign disinterest. This tactic is even better if you are truly disinterested. Never, and I mean never, let the buyer or your broker know that you are hot for a property. In your enthusiasm, your inclination may be to confide in your broker. Do not. It is a little known fact that the broker is actually working for the seller. He is obligated to relay any information that you impart to him to the seller.
Drive a hard bargain. You have all the advantages. The current real estate market has gone begging for buyers, so you can negotiate something truly advantageous. Once you have consummated the deal, you will be examining the landscape from a completely different perspective. You need to maximize your opportunity now.
Don’t be afraid to insult the seller. In the current real estate market, it is unbelievable that many buyers will offer more than they normally would because they think the seller will be offended. It’s a buyer’s market and this is a business transaction. Go for the throat.
In short, to optimize a real estate transaction, you must deal in cold, hard facts. Emotion has no place at the table. Find the deal, appraise the property and run the numbers. If these are acceptable, make an offer well below your strike price and be satisfied if it is accepted.
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Happy house hunting!
]]>The new Consumer Protection Act (CPA) does not allow for properties to be sold “as is” or “voetstoots” anymore, and the seller should reveal all known defects to the buyer. The problem is that the seller might not always be aware of certain problems, and it might be hard to prove the seller knew about a specific problem when he sold the property.
Today many estate agents will provide you with a Diclaimer and Disclosure document, signed by all parties. This document is for their protection (the estate agent and seller), not so much yours… They will use this document as their weapon against CPA claims if needed.
A professional Home Inspections will alert all parties about any defects or problems, and the offer to purchase should be drafted with this in mind. Either have the seller repair the problems, or negotiate a better price after getting quotes for the needed repairs. After repairs are carried out, the home inspector can once again verify that repairs have been done according to required standards and the purchase can proceed.
Should the seller not be prepared to fix the problems or negotiate a lower price, the inspection report can be sent to the bank to prove that the property is not a good investment, and the bank will most likely decline your home loan, which will offer you a way to legally get out of the contract. I am not saying you should abuse the system in any way, but you wouldn’t want to buy a property if the repairs are going to cost more than you can afford, or cause you to overspend on the property.
If you intend to make use of a professional property inspector, do keep the following in mind:
After searching for a while, I’ve found Inspect-a-Home to be the perfect company to use. They have been in business for a long time and have franchises throughout South Africa. All of their franchise owners are trained and experienced, and their prices are fixed across the board.
One more benefit is the fact that Inspect-a-Home will not recommend or endorse any specific company for repairs or quotes. While this may sound counter-productive, it ensures that none of their inspectors will make any false claims since they have nothing to gain and remain completely unbiased.
I have negotiated a special discount (only available to my home loan customers) on all home inspections requested on my website. If you are interested, please visit this page to receive your 10% discount on your property inspection
I hope that this article could help you – whether it just confirms you are buying a quality property or to prevent you from buying a problematic property which could cost thousands of rands in unforeseen expenses.
If you haven’t yet singed the Offer to Purchase, I would suggest that you insert a clause in your offer to purchase that states that the offer is subject to a favourable property inspection by Inspect-a-home and the seller should pay for the inspection. The seller may keep the report should you decide not to purchase, and the report is valid for 6 months. Just let the seller know about the website address where they will also be eligable for a 10% discount on the inspections.
IMPORTANT: The discount is not available if you request an inspection on their own website. If you wish to receive the discount, you must apply on this home inspections page
]]>Nedbank home loans detoxed
http://moneyweb.co.za/mw/view/mw/en/page292516?oid=548900&sn=2009+Detail
JOHANNESBURG – Nedbank (JSE:NED) is making progress in narrowing its losses in its home loans business, thanks to a better macro-economic environment and the better quality of loans the bank is now writing.
Nedbank Chief Operations Officer Graham Dempster (pictured) said previously the risk for reward in home loans was not balanced and now the bank had made an adjustment.
“We are now writing better quality home loans and not at a loss,” said Dempster.
CEO Mike Brown also mentioned that Nedbank on average might lose some market share in the home loans market as it was selective on the loans it wrote.
(via Instapaper)
New property rates bad for tenants and bad for investors
http://www.moneyweb.co.za/mw/view/mw/en/page292525?oid=547827&sn=2009+Detail
He has said in a statement that the intention is only to change the rating of “guest-houses, bed-and-breakfast establishments, small hotels and the like..” . This does not make clear what the ANC government intends with regard to a holiday flat, for example, that is occasionally let.
Questions have been raised about the constitutionality of the bill. Without pronouncing on that, it does seem manifestly unfair. Rates levied on properties should be about land use and nothing else.
(via Instapaper)
It stated that homeowners who own a second residential property (which might be rented out) would have to pay commercial municipal tax rates instead of the current residential tax rates. That would in effect have doubled the current municipal taxes in most cases, in many cases even higher.
It would have been a disaster, since rental prices would have had to increase since homeowners would find it hard to absorb the additional rates without making a loss. Higher rentals would also mean lower occupancy and could even cause some property owners to default on their bond account and lose their properties.
It would also have been very unfair if owners were to pay commercial rates for properties zoned as residential and in areas where the municipalities actually evicted businesses operating from residential zones.
Fortunately the Department of Cooperative Governance responded to the news by releasing a new statement which clarified the situation.
The rates that would increase is not applicable to second and third residential properties (even if being rented out), but rather to properties being operated as businesses such as guest houses, bed and breakfasts and small hotels. In these cases the properties should already be zoned for business and should pay the applicable commercial/business taxes which seems fair.
Monitoring these zoned properties would also be a lot easier than monitoring properties zoned as residential but taxed as commercial.