How do you get a Bond in difficult times?

Private Property South Africa
Denise Simpson
The current financial crisis the world is experiencing, coined the ‘credit crunch”, is resulting in many property buyers finding it difficult to obtain a home loan. The Banks are very averse to risk, and do not undertake the issuing of loans lightly.
If you are in the home loan market, you’ll need to comply with the following criteria at least:
  • 10% deposit on a property up to 2.5million
  • 20% - 25% deposit on a property over 2.5million
  • 70% deposit on vacant land; and the client must qualify for a higher amount in order to build.
Important things to remember on the credit scoring used by the Banks:
  • Affordability – they normally take 30% of gross income.
  • Income and Expenditure - they look at the surplus after all deductions and expenses have been taken off, to see if there is sufficient to service the bond repayment.
  • Credit risk is linked to a score card. If your credit risk according to their scorecard is negative, the loan will be automatically declined by the system, before the paperwork even gets to a Credit Manager, (this saves the Banks money on unnecessary admin costs).
  • Credit bureau must be clear of any judgments or negative comments, e.g. bad debt written off, or even a trace alert.
  • Payment History - how the client conducts his retail accounts, and ‘unpaids’ on personal bank accounts.
  • How much debt the client is exposed to.
  • Lastly, the property they are bonding must offer excellent security.
The costs involved in obtaining a home loan are:
  • Bank Initiation fee - maximum of R5000.00 (updated to R5 985 in 2016)
  • Transfer Duty will apply on property values over R500 000.00 (Updated to R750 000 in 2016)
  • Transferring attorney charge a fee to put your name on the title deed.
  • Bond Costs for drawing up the bond documentation in favor of Bank of choice.
  • Deposit.

Denise is the National Sales Manager of iLoan Home Loans
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