Back in the pre-2007 property heydays it was quite easy to obtain a home loan at favourable rates - even as a first-time buyer. Since then it’s been tough going with local banks increasing their scrutiny of applicants, tightening their lending procedures and offering fewer, smaller home loans.
Since the pre-2007 property boom, local banks increased their scrutiny of applicants, tightened their lending procedures and offered fewer, smaller home loans. However, all this is changing.This is according to Bruce Swain, MD of Leapfrog Property Group, who says based on new data released from home loan originator BetterBond, it seems that this situation is changing, with the latest bank policies painting a rosier picture.
Banks are willing to lend
“It’s certainly been harder for buyers to obtain home loans over the past few years and we’re very excited to see that the banks are starting to ease up on their lending policies,” says Swain. He says that the support of the banks is needed to boost the market that’s been struggling in recent times.
Swain gives a summary of what prospective home loan applicants can expect from our national banks:
Employed Standard Bank clients can now get a new 100 percent loan on a property of up to R3.5 million, and an 80 percent loan on properties over that price (the loan term ranging up to 30 years).
Non-Standard Bank clients could get a 100 percent loan on properties up to R1.5m, 90 percent for properties between R1.5 and R2.5 million and an 80 percent loan on real estate selling for R2.5 million or higher over the same period.
In what will surely be good news for many, the loan terms for new, self-employed existing Standard Bank clients, as well as non-clients, are the same as for employed clients.
ABSA
Employed ABSA clients can apply for up to a 100 percent loan for a property of R2 million or less, up to 90 percent on a property valued at over R2 million and, up to 85 percent on a purchase price over R3 million.
The terms remain the same for non-ABSA clients, except for a purchase price of R3 million or more, in which case they can apply for a loan of up to 75 percent.
Self-employed clients (both ABSA and non-ABSA clients) can apply for loans of up to 85 percent on a purchase price of less than R3 million, and 75 percent should the price be R3 million or more. All loans have a maximum term of 30 years.
First National Bank
At FNB the same terms apply for salaried FNB and non-FNB transactional clients, with a maximum loan term of 20 years. Applicants can apply for 100 percent loans for properties with a purchase price of R2.5 million or less, 95 percent loans for prices between R2.5 and R3 million, and 90 percent loans on a R 3 million or higher purchase price.
Self-employed buyers can apply for loans up to 95 percent on properties priced at R3 million or less, while 90 percent loans are available for purchase prices over R3 million.
Nedbank
Nedbank offers loans to clients up to a term of 25 years. They offer clients a 90 to 100 percent loan on a purchase price of R1.7 million or less, a loan of 90 percent up to R3 million, or an 80 percent loan for prices over R3 million. All clients (Nedbank and non-Nedbank clients) are accepted through the online channel, branch and home loans sales consultant channels. Non-Nedbank clients are not accepted via Mortgage Origination.
Self-employed clients with a primary business relationship with Nedbank will also be considered.
Buyer Advice
While it may now be easier to obtain a home loan, and they encourage people to invest in residential property, Swain says he would like to caution potential buyers to take all the additional costs into account as well. “From the transfer duty to the monthly municipal rates, it is important to ensure that you will be able to afford the property you are interested in in the long term.
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