South Africa is not immune to the current global credit crisis, and the evidence is showing in a couple of ways. First, home prices are dropping. According to statistics released by bond originator ooba, home prices have fallen 6.6 percent overall compared to October last year. In real terms, that means the averaged home priced at R803,908 last October would only be able to sell for R751,118 in October of this year.
A second indication of our poor property market is that potential homeowners are finding it difficult to get financing. Banks are being very cautious because of the credit crisis, the National Credit Act and economic outlook. Even though the rate of home loan declines are down 1.4% it doesn't really dent last months rate of 51%.
In the third quarter of this year alone, the number of loans more than two months behind rose 21.5%.Another reason for banks to tighten their lending is the rising number of homeowners who are late on their installments.
What choices does a potential homeowner have in today's market? Remember that decline rates are different for each individual bank, so take the time and before giving up, try applying with other banks.
Obtaining a home loan is not what it used to be. Simply having a steady job will not qualify you. It is essential that you have a positive credit rating. Lenders require that an applicant be able to prove their ability to make the required payments. Be sure that you have not defaulted on any other payments in the previous two years before submitting an application for a home loan.
Lenders are looking for stability in their borrowers, as evidenced through a good record of paying of credit card debt, hire purchase obligations and any other form of debt. A history that shows you have already successfully managed a home loan will also go a long way with lenders.
If your past is not the greatest, it is beneficial to be honest. If you had problems in your credit history lenders appreciate when a borrow states the truth instead of lying. Also, if you open a savings fund in order to gain a home deposit fund, you are showing signs of serious financial obligation. Yet, dig into details because the average deposit requirements stands at 10 percent, but varies in different banks.
The maximum your monthly installment should be is 30% of your total income, and it is better if it is less. Banks won't give you a second look if you don't meet this prerequisite.
When thought about all in one, the property market today is one filled with great amounts of frustration. In one corner you have sellers that are having a difficult time finding someone to buy their home, and may be forced to reduce their prices, which works out quite well for the buyer. Although it is getting increasingly harder for buyers to secure financing.
If you are able to handle the payments and have a steady, sufficient source of income, you should exhaust every option when it comes to getting a home loan.
A second indication of our poor property market is that potential homeowners are finding it difficult to get financing. Banks are being very cautious because of the credit crisis, the National Credit Act and economic outlook. Even though the rate of home loan declines are down 1.4% it doesn't really dent last months rate of 51%.
In the third quarter of this year alone, the number of loans more than two months behind rose 21.5%.Another reason for banks to tighten their lending is the rising number of homeowners who are late on their installments.
What choices does a potential homeowner have in today's market? Remember that decline rates are different for each individual bank, so take the time and before giving up, try applying with other banks.
Obtaining a home loan is not what it used to be. Simply having a steady job will not qualify you. It is essential that you have a positive credit rating. Lenders require that an applicant be able to prove their ability to make the required payments. Be sure that you have not defaulted on any other payments in the previous two years before submitting an application for a home loan.
Lenders are looking for stability in their borrowers, as evidenced through a good record of paying of credit card debt, hire purchase obligations and any other form of debt. A history that shows you have already successfully managed a home loan will also go a long way with lenders.
If your past is not the greatest, it is beneficial to be honest. If you had problems in your credit history lenders appreciate when a borrow states the truth instead of lying. Also, if you open a savings fund in order to gain a home deposit fund, you are showing signs of serious financial obligation. Yet, dig into details because the average deposit requirements stands at 10 percent, but varies in different banks.
The maximum your monthly installment should be is 30% of your total income, and it is better if it is less. Banks won't give you a second look if you don't meet this prerequisite.
When thought about all in one, the property market today is one filled with great amounts of frustration. In one corner you have sellers that are having a difficult time finding someone to buy their home, and may be forced to reduce their prices, which works out quite well for the buyer. Although it is getting increasingly harder for buyers to secure financing.
If you are able to handle the payments and have a steady, sufficient source of income, you should exhaust every option when it comes to getting a home loan.
About the Author:
Tom Martens is the content coordinator for South Arica's leading Home-loans portal which amongst others offers origination services for ABSA homeloans
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