Applying for a home loan can be a very time consuming and involved process. Mortgage originators can assist you in applying for a home loan or building loan, from the various major banks.
The general services of mortgage originators are:
Evaluating your financial situation;
Advising you on the best way of financing your new home;
Helping you apply for finance;
Explaining all the different banks' home loan options;
Negotiating and liaising with the banks on your behalf;
Assisting with all the necessary paperwork to apply for a home loan;
How Mortgage Origination works:
Step 1: You sign an offer to purchase a home.
Step 2: The estate agent obtains information from you regarding how your home would be financed.
Step 3: The estate agent then forwards this information to a mortgage originator.
Step 4: The originator should then contact you with advice on what the different banks offer, i.e. home loan type, home loan rate, and so on.
Step 5: You then choose an option which suits your needs.
Step 6 : The originator submits the necessary documentation to the bank of your choice.
Step 7: The originator follows up the application process with the bank and should keep you abreast of what is happening at all times.
Step 8: The originator confirms with you, your acceptance with the bank.
Step 9: The originator informs you of all the legal requirements and follows-up the process with the transferring- and bond attorneys.
A mortgage originator cannot guarantee you a home loan
Although the originator has more than likely established a very strong relationships with the various banks, all lending by the banks is subject to the home buyer being able to afford the home loan and willingness of the home buyer to repay it.
How much does this service cost?
The service is generally free to the home buyer. The estate agent is paid a standard commission by the originator, for referring the home buyer. The originator is then paid a fee by the bank, once the home loan is registered. These fees are usually a percentage of the home loan amount, but is not added to the costs that the home buyer incurs.
How do mortgage originators make money if they don’t charge you?
There are numerous originators in the market. If you want an originator to assist you in obtaining finance then deal with a reputable originator. Originators don’t charge you for their services as the home buyer, they are paid a commission from the bank whom acquires your home loan. When dealing with an originator make sure you don’t pay an administration fee as this is an expense you would not normally incur.
The South African mortgage origination market has become so competitive in this environment that the originators are having to offer you the client more to obtain your business, like pay a portion of your registration cost from their commission to secure your deal.
Tips for dealing with mortgage originators
You should not need to sign any agreements with mortgage originators, however if you decide to use an originator it is to your own benefit to supply the originator with all the required information and documentation, as soon as possible and on time.
Do your own homework too, regarding what the different banks offer.
You may already have a relationship with a particular bank, and would like to keep all your finance within that relationship. If so, make sure that you mention this fact to the originator, and specify that the originator apply to that particular bank first.
Ensure that you are kept informed through the whole process, from signing the offer to purchase, to registration and transfer.
Take time to compare all the different options the originator comes back with. Make sure you understand the different banks' various home loan products and that you are informed of what home loan rate each bank offers.
You are not obliged to accept any of the offers the mortgage originators bring to you from the banks.
Make sure to obtain documented proof of your approved home loan.
Information the originator requires
You generally don't need to complete any forms, the originator will complete the applications on your behalf and submit them to the banks. You however need to supply the originator with the following information and documentation:
- All your personal information (names, ID numbers, contact details, and so on);
- Financial information;
- Banking details;
- Copy of your ID Document;
- Copy of your latest payslip (or audited financials - if self employed).
Once the originator has all the necessary information and submits it to the banks, you should hear from the originator in at least 3-5 working days, given that all the relevant information given to the originator is correct and acceptable to the banks.
This article originally appeared in Property Power 11th Edition Magazine. To order your copy at the discounted price of R120 click here.