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In terms of property finance there are various product categories. Primarily:
New home loans
Home or land ownership remains the primary foundation of wealth¸ as far back as history can remember. Land ownership provided not only wealth but also granted the ability to the owner to attain more wealth. Far to many people lay idle waiting for some or other event to propel them into taking the plunge and buying property. You need to ask yourself is there any point in waiting. The prices are not coming down. You need to get on with it. A general issue amongst new home owners is thier reluctance to act due to the fact that they are unable to find a house within thier price category which meets thier needs. This is not a good reason to opt out. Rather find something which you can afford¸ with the potential to expand. If you are young and single and unable to afford to get into the market¸ why not get a group of friends together and purchase a house with sufficient space to accomodate you all until such a time you need to part ways. You could then sell the property¸ everybody involved would then have a little capital which would make a huge difference when buying their own place. The point is keeping yourself out of the property market prevents you from keeping up with escalating property inflation. Demand for property in South Africa is presently extremly high mainly due to the boundries of the past being removed¸ more and more people are moving from the old township areas into the leafy suburbs¸ due to the obvious imbalance in numbers there is simply not sufficient supply to meet the demand. So forget about the bursting property bubble. Government is doing everything within its power to make housing more accessible. Pressure is being placed on banks to provide finance in areas and for income groups which they previously would not have considered.
To qualify for a home loan you will be able to use 30% of your joint gross income (income before deductions) to meet monthly repayments e.g.
Gross Income R15000 * 30% = R4500 which would get you a loan of between R400 000 and R450 000. Depending on the interest rate and term of the loan. Loans can be taken over any period up to 30 years.
Banks are also prepared to assist first time home buyers with transfer duty and attorney costs.
Should you have any questions please feel free to send us a mail and we will get back to you urgently.
Please refer to the new credit act passed by parliment on 1/6/2007 for the latest updates.( We have included a section on the act. Simply click on the link).
Further Loans
Further loans are also often refered to as second bonds. The term further loan refers to a transaction where additional money is loaned against the security of an existing property which has an existing bond over it. Your current loan is increased based on the value of your property and your ability to repay. This type of loan may be used anything¸ such as debt consolidation¸ the purchase of a new car¸ study or home improvements. The transaction involves registering a bond over your existing property as security. Once the bond has been registered on your title deed. The funds are made available to you. Apply Now.
Building Loan
If you need to build your own house¸ renovate or extend. There are various options.
The most common option would be to get plans drawn up and approved by your local municipality. You would then have to obtain quatations from contractors.(Please note these contractors need to be registered with the NHBRC in order for the banks to consider the loan). Once you have put all this info together you could simply contact us and let us arrange the loan.
Once you have obtained a loan the bank will pay out the funds in increments based on the progress of the building. Before every payout the bank will deploy a valuator to the site to inspect the quality of the work done¸ if happy he will authorise realese of a payment. This process might apear cumbersome¸ but has been put in place to protect the banks interest and your own.
Under no circumstances will the bank consider agranting a loan to a owner builder unless the owner is a registered builder with the NHBRC. The only way other way to be a owner builder is to complete the project with your own funds. On full completetion of the project you could approach a financial institution for finance¸ which they would consider. A good way to achieve this could be to re-finance an existing property and then use the funds to complete a building or extension. Apply Now.
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Debt consolidation
Debt consolidation can be a very effective tool to combat deterioration of your disposable income. Many of us fall into the trap of taking on to much debt. Unfortunatley theses payments add up and eventually make your day to day living difficult¸ if not impossible. The idea behind consolidation is to take all these small debts and trade them in for one large loan. For example you may presently have a car payment of R1500¸ store accounts totaling R800¸ credit cards of lets say R1000 and other various debts with a monthly payment of R500. This all adds up to a grand total of R3800. Based on standard repayment terms and interest rates your total debt would amount to around R100 000. If you were to consolidate this amount to your bond your monthly repayments would drop from R3800 to around R1200¸ freeing up a whopping R2600 every month. The first argument against this is that the consolidated debt is now repayable over 20 years. This may sound long¸ but inflation will work in your favor by eating away at your debt. All you need to do is to consider that the average house was selling for around R200 000 just 10 years ago. Today that same house will cost around R800 000. That implies that your bond repayment of R2000 10 years ago is the equivalent of a repayment of R8000 today. Based on this trend it is extremly advantageouse to convert expensive short term debt into cheaper long term debt.
The pitfall with consolidation rears its head when the funds intended for consolidation are used for somthing else. You then sit with the additional long term debt as well as the original short term debt. If there is even a remote posibility that you could fall into this trap¸ rather be honest with yourself and make arrangements with the attorney registering your bond to make the necessary debt settlements on your behalf. Apply Now.
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The new credit act
The new credit act (NCA) relates to the compliance and conduct of credit providers and is aimed at protecting consumers against reckless lending and came into effect on 1/6/2007. In order to achieve this the credit act provides a set of rules for all credit activities.
You will be affected when applying for any of the following facilities:
- Home loans
- Overdrafts
- Credit Cards
- Personal Loans
- Vehicle Finance
- Revolving credit facilities
- Store Accounts
The biggest change from the old Usury Act is the protection gained by the consumer when applying for credit. Credit grantors will now be held accountable for reckless lending and stand to loose thier claim against the borrower if it can be proven that the lending was unjustified. This is obviously going to have a major impact on the process involved in granting credit. The borrower will now have to disclose detailed income and expenditure as well as full disclosure of any creditors. Faliure to disclose could exonorate the creditor. Credit grantors are now also required to evaluate the consumers understanding of the risks, costs and obligations involved in the agreement.
Other areas issues dealt with by the NCA are as follows:
- Valid reasons need to be given for the decline of any loan.
- Spouses written consent will allways be required if married in comunity of property.
- All new credit agreements will need to be reported to the National Credit Bureau as well as a detailed payment history.
- clients will need to sign off a quotation detailing all costs and interest charges prior to the conclusion of any credit agreement.
- The client also needs to be given a cooling off period for any credit granted in excess of R50 000.
Other benifits that you will now be afforded through the new act is that you will no longer be required to pay early settlement penalties if you decide to payoff debt early. The only exception to this is your home loan account. Previously however you could be penalised up to 6 months interest, this has been reduced to 3 months. So remember to give timeouse notice if you intend to sell your property.
You are now also entitled to a free credit report once a year. Additional reports will need to be paid for.
If you have any questions relating to the new credit act please feel free to mail us with your questions.
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