Real Estate

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.

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 that banks are clamping down on their lending is because of the increasing number of late payments by homeowners. In just the third quarter of the present year, loans that were more than two months late increased by 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.

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 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 thinking of purchasing a home,it is very much worth your time to explore each avenue to receive a home loan as long as you are able to afford the payments and you have a job 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.