Untitled Document

Hi [NAME]

June was a month in which we felt that if we wanted something to move, we needed to be prepared to kick it.

While the world was in celebratory mood, we were attempting to provide a service to our clients amongst very difficult circumstances.

Not only were applications taking up to 5 days longer to be approved, but the banks decided that perhaps this is a good time to tighten the purses a little more. Go figure…

The enclosed article mentions just a few of the many frustrations applicants face on a daily basis. Be prepared! We are heading for even more difficult times!

Have the banks loosened their purse strings?

Since March 2010 we’ve seen a slight increase in trading activity in the property industry, coupled by a year-on-year real price increase of 7.2%. This slight tremor may be attributed to the lowest repo rate since 1981. Is this a slow, sustainable recovery of the property market? It all hangs in a balance – at the hands of the big 4!

While the banks advertise that they offer 100% bonds, the success rate of such bonds is a mere 3% to 4%. Most buyers are still required to put down a deposit. The higher the deposit, the more favourable the interest rates and the better the chance of obtaining a bond approval.

The banks’ internal scoring systems have also been tightened. If you don’t meet their minimum scoring, which has been pre-programmed into their computer system, your application will not even meet a human being. You will immediately receive a non-negotiable “system decline”.

Should you receive income other than your

basic salary, for example, commission or overtime, certain banks will only take 50% of your six monthly average income into account when determining your affordability.

The buy-to-let product is a thing of the past. Some banks are not taking rental income or potential rental income into account at all, while others will only consider 40% of the rental income.

If you are one of those property investors who have successfully managed to build an income earning portfolio, you will be shocked to learn that the banks are hesitant to finance you based on your rental income only. An application of salaried earner, with a potential of being retrenched, will stand a better chance of being successful.

The National Credit Act has far too often recklessly been blamed as the biggest contributor of the low growth in the mortgage bond market. One has to ask the question, if one can prove one can afford a mortgage bond in terms of the NCA, as that is all that is required, then why are applications so easily declined?

The banks credit criteria differ from bank to bank. While some banks will be more flexible in certain circumstances; others will apply their criteria stringently. The average individual does not have access to this information and won’t know which bank is more likely to approve their application. On your own, it’s trial and error, time consuming and frustrating as you battled your way through endless amount of credit jargon.

Until the banks are willing to provide finance to those who can prove their ability to service such finance, without any fancy scoring systems and unrealistic expectations, the property market will remain stunted, to the detriment of many investors, home owners, entrepreneurs and the bank themselves. A case of cutting their nose to spite their face!

Tips for improving your chances of a home loan

1. Save for a deposit.

2. Check your credit record regular and rectify any problems immediately.

3. If you have credit accounts that must be paid monthly, put debit orders in place.

4. Ensure that your full salary is deposited into your account monthly. Don’t accept cash as an alternative.

5. Always have sufficient funds to cover all the debits being deducted off your transaction bank account.

6. If you have credit limits on your credit cards that you don’t use, reduce them.

7. If you are self-employed, have your management accounts drawn up at least every alternate month and financials within 3 months of your financial year end.

8. If you have lease agreements that have been renewed, obtain addendums to the original lease agreements reflecting the new term of the lease. Have you rental income deposited into your account.

9. Pay your taxes.

10. Use the services of a tenacious bond originator who is honest and knowledgeable of the banks’ credit requirements.

Thank you!

To South African population who stood united in support of the Soccer World Cup 2010. We are so very proud of our nation! Continue to wave your flag…

To the fans, who, despite negative international media, came out in droves, dressed up to the nines, to support their teams.

To our Black Stars, Ghana, for their professionalism, determination and sportsmanship. We are very proud of you and share your pain in having to go home prematurely.

To the South African Police, your visibility, politeness and patience has not gone unnoticed.

To the players for putting up a fabulous show and emotionally charged performance. We sang, jumped for joy, vented our anger and frustration, while living the game with you.

To the world – give South Africa a chance and will prove that indeed we can!

How can we help you!

Taking your monthly budget and the banks’ credit criteria into consideration, we will advise you on the size bond you will qualify for.

We will assist you in gathering all the required supporting documents, analyse them and highlight any potential setbacks, enabling you to sort them out before proceeding with the application process.

We will submit your application to all 4 major banks simultaneously, avoiding any delays.

Understanding the banks’ credit criteria, their systems and jargon, enables us to effectively negotiate and motivate the transaction on your behalf.

Upon receipt of the responses from all banks, we will draw up a comparable analysis of all costs, interest rates and facilities offered, so that you can make an informed decision as to which deal best suits your needs.

www.propertyfactor.co.za
info@propertyfactor.co.za
Tel: 0861 106 306

Skype: tess.propertyfactor