Homeloans - Getting your first bond

Everyone seems to know something about the property market these days, especially over the past three years what with property prices soaring to incredible heights. Applying for a home loan can be a frustrating process. Coupled with an information overload from people seemingly in the know and the confusion on who exactly to contact, buying a house doesnt exactly sound as easy as it seems.

According to Jackie Webb of SA Home Loans, its best to start with the basics. Individuals will need a signed application form, a copy of their identity document, a copy of their payslip, copy of their marriage certificate (if married), three months certified bank statements from the bank, their latest bond statement and their latest rates bill or statement, says Webb. If applicants are self employed, then they will also need to include a letter from their accountant confirming their income and 12-months of bank statements. In order to qualify for a bond, one of the most important criteria to keep in mind is that the home must be a residential property and not vacant land. Other basic qualifying criteria include a minimum joint gross monthly income of R7000, a minimum bond of R140 000, and a maximum bond of R5-million. The minimum property value of the house must be R170 000 and the minimum value for a flat must be R250 000, with a maximum stand size of 2.5 hectares. Instalments must also be no greater than 25% of the combined household monthly income. Before we finish with the technical stuff, it is also important to note that it is crucial for applicants to have a satisfactory credit record in order to qualify for the home loan. A healthy credit record will benefit home owners in the long run as the processing of the loan will be quicker and hassle-free.

Current home owners and/or those looking for their dream home are advised to get a preapproved bond when searching through those countless property pages in the newspapers. This will help give you a better idea of what youre able to afford and ultimately, itll empower you with some negotiating skills that could help you save some extra cash when discussing prices with the seller.

Xolani Nxanga, head of business acquisition at Standard Bank's home loans division says that home buyers are advised to negotiate with the bank regarding the interest rate on their home loan. This is something first time buyers are usually not aware of, says Nxanga. We also advise our clients to get a pre-approved home loan from one of our branches located countrywide. This will assist the client in negotiating a good price for the house. This will also give comfort to the seller because they feel as if theyre negotiating with a cash buyer. During the application process, the bank assesses the individual's ability to repay the loan over a specified period, usually around 20 years, as well as the applicant's credit worthiness. The bank also assesses the property as it serves as security for the loan applied for.

The market has been opened to a broader spectrum of buyers because at the moment, we're experiencing the lowest interest rates in 25 years, despite the recent increase of 0.50%. Leon Naidoo, chief operating officer of Sanlam Home Loans offers more advice to first time home buyers. "Interest rates have reduced considerably in recent years but this positive aspect has been neutralised somewhat by the corresponding increase in house prices," says Naidoo. "The prime rate is currently 11.50% but you may negotiate for concessions. Prospective home buyers must plan well in advance before deciding to buy a home. Legal costs and other contingency costs such as a deposit, attorney bond registration costs, transfer fees, administration fees, etc. can be major stumbling blocks if they are not taken into account in advance. With all banks being increasingly competitive, product and price are easily matched to suit the applicants financial status. It is therefore important that a prospective client considers a lender with a good reputation and one which provides excellent service. Seek advice from people within the industry and consult with a financial advisor to discuss aspects such as life cover because of your changing circumstances. Consider the option of registering the bond at the highest value for future home improvements or maybe the consolidation of debt.

Now that youve got the facts from the experts in the industry, why not go out and test the market for yourself? Just remember that good advice is hard to come by and its a better option going to a reputable financial service provider when considering a home loan.

Courtesy SA Complex News

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