Owning a home improves one’s life, that of one's family, sense of self-worth and reinforces the breadwinner’s determination to earn enough to keep up monthly bond repayments.
However, if you need a home loan, you need a mortgage originator, according to Shaun Rademeyer, chief executive officer of BetterBond Home Loans.
This is according to Tony Clarke, managing director of the Rawson Property Group, who says home ownership in South Africa is increasingly proving to be a stabilising and social force.
“The more South Africans become homeowners, the greater the country’s chance will be of achieving peace and individual wealth accumulation.”
He notes that as a group, an average growth rate of 35 percent per annum over the past three years has seen buyers in lower priced areas such as Kuils River, Mitchells Plain, Grassy Park and Macassar in the Cape, Chatsworth and Cato Manor in Durban, Bez Valley and Buccleuch in Johannesburg, as well as much of Pretoria East become homeowners.
But of course, even in lower priced areas, many buyers are still battling to obtain home loans as there are limited 100 percent home loans available on the market currently.
According to Denver Vraagom from Gunston Attorneys, would-be home loan applicants have to accept that banks act in a highly rational way.
Using the research tools at their disposal, they are usually able to check the client’s employment and credit history, his performance as a tenant (if he has previously rented) and the true value of the home (as assessed by their valuators), he explains.
Due to the difficulties they have had previously, they cannot place themselves in high risk, high loan positions unless they have the evidence to justify such a move.
“The good news, however, is that the banks are now beginning to look more leniently on first-time home buyers and those buying into the affordable housing market are increasing,” says Vraagom.
Owning a home improves one’s life, that of one's family, sense of self-worth and reinforces the breadwinner’s determination to earn enough to keep up monthly bond repayments.
However, if you need a home loan, you need a mortgage originator, according to Shaun Rademeyer, chief executive officer of BetterBond Home Loans
Rademeyer says banks have lowered their deposit requirements in most house price categories over the past few months, and they are approving a higher percentage of home loan applications – but that does not mean that they are not cautious.
Banks look even more closely at the credit histories and financial capabilities of potential borrowers, with the result that more than half (56 percent) of all home loan approvals are only achieved now after the application has been submitted two or three times, possibly to different financial institutions, compared to 49 percent that required multiple submissions a year ago, he says.
In other words, he says, while higher property sales volumes and increasing prices are giving the banks more confidence about lending into the real estate market, they are still dubious about the state of most consumers’ household finances.
Furthermore, he points out that on top of this, banks’ loan criteria differs and can also change quite frequently, as can their deposit requirements and the interest rates they charge on home loans.
This then makes it extremely difficult, if not impossible, for individual consumers to decide where they might get the best response to their home loan application, he says.
Rademeyer notes that in the past year, 19 percent (or almost one in five) of the approvals achieved by BetterBond have been for applications that were initially declined by the borrower’s own bank but were then submitted to other lenders and ‘rescued’. A year ago, this percentage was 16.5 percent.
According to Rademeyer, this underlines the need for home loan applicants to enlist the help of reputable and successful mortgage originators that can provide a comparison of the various borrowing options on offer at any particular time, and will motivate their applications individually and submit them to several different banks if necessary. – Denise Mhlanga
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