Buying a home is not like buying a car, says bond originator at First Bond, Sampie Kemp.
“Too many people these days are focused on getting a 100 percent bond, and do not consider setting up savings and have no clue about the legal, valuation and transfer costs, which can be considerable.”
Step one, he says, is to do your homework and know how much you can afford.
Rex Schelling, property finance consultant for Bond Advisor, agrees that you should “get your house 100 percent in order, before even thinking of applying for a bond”.
“Those who are employed should take the time to fill in the application form, with information accurately giving a snapshot of your current financial position.
“You will need to provide payslips and bank slips (not internet copies) for the past three months, a marriage certificate (if married), a copy of your identity document (clear copy) and a copy of the deed of sale.
“A good motivation may also be necessary.
“The self-employed should provide the same. However, a minimum six months’ latest bank statements (non-internet copies) is required, as well as a letter of proof of earnings from a registered accountant – possibly your latest IRP4 tax assessment from SARS, a two or three-year financial statement, and latest monthly management accounts.”
Schelling says it is important to make sure there are no judgments or payment defaults against your name, as banks are very strict with this.
“Make a list of all your debts and rank them by interest rate, starting with the highest to the lowest.
“Pay off the highest cost debt first by making additional payments. Once it is settled move on to the next highest and so on.
“Also apply at the bank where you have the strongest credit history.”
However, Richard Gray, CEO of Harcourts Real Estate, says you should not restrict your application to your own bank.
“Often people get a loan from another bank due to different lending criteria and credit appetite.
“The bigger the deposit you can put down, the better. You will have a better chance of getting finance if you can put down a deposit, as you will be considered to be a lower credit risk for the bank, which could also lead to a better interest rate.
“Take advantage of the free service offered by mortgage originators, as they are able to apply on your behalf to multiple banks, and will ultimately eliminate the hassle of the home finance application process.”
He adds, “If you are thinking of buying a house, be aware that paying accounts late will count against you. If you are diligent about paying all your accounts on time for a period of six months, your credit record should be clean.” - The Mercury
Shave thousands off your bond
* Pay more and save more. You’ve heard it before and it’s true. Paying just R100 more on a R300 000 home loan a month shortens the 20-year-period perhaps by a year or two and will definitely save you money.
* When the interest rates drop, or if you renegotiate a better rate, keep your repayments at the same level to which you have become accustomed. That way you accelerate your payments and save, without affecting your current budget. These extra deposits into your home loan, whether monthly or lump sums, also yield interest savings tax free.
* Find out whether your employer offers a housing subsidy to employees.
* Check your home loan provider’s policy on cash handling fees, which can be expensive. Find out if your bank charges cash handling fees on cash deposits into your bond. If not, deposit cash into the bond and, when needed, transfer the cash back into your current account overnight, using internet banking.
* Stay liquid. Put extra money into the bond as fast as you can, but always retain access to it. Set up your access facility when you negotiate the bond or renegotiate your bond to have this facility included.
* Always pay by debit order.
* Be proactive and contact your home loan provider and renegotiate the rate you are paying. Find out about new home loan products and services. - The Mercury
* Source: BondExcel