There is mounting evidence that even South Africa is not immune to the current credit crisis that is affecting the entire globe. It should be mentioned first that home prices are continually dropping. Statistics that were releases by bond originator ooba state that the home prices have fallen 6.6 percent overall compared to last October. Broken down into simple terms, it basically means that a house that is sold last year would have brought R803,908, would only bring in R751,118 in October of this year.
Banks are being cautious in light of the credit crisis, the National Credit Act and deteriorating economic outlook. Though the rate of home loan declines were down slightly, 1.4 percent, it doesn't really dent last month's rate of 51 percent.The second indication of the poor property market is that potential homeowners are finding it increasingly difficult to get financing for their properties.
Another reason for banks to tighten their lending is the rising number of homeowners who are late on their installments. In the third quarter of this year alone, the number of loans more than two months behind rose 21.5%.
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.
Another must, a sound credit rating. It is no longer enough to have a steady paycheck. Home loan applicants must be able to prove that you can make your installment payments and that you have not been late or defaulted on any other payments for at least two years before making your home loan application.
Lenders are looking for stability in their borrowers, as evidenced through a good record of paying of credit card debt. A history that shows you have already successfully managed a home loan will also go a long way with lenders.
If your history is not stellar, it is best to be honest. Lenders appreciate a borrower who is upfront about a rough spot in his credit history instead of trying to cover it up. Also, show that you are serious about your financial obligations by opening savings account for the express purpose of building a home deposit fund. The average deposit requirement is 10 percent, but this can vary from bank to bank, so do your research.
Make sure your monthly installment is no more than 30 percent of your monthly income. Less is preferable. Banks will not consider your application if the installment does not meet this requirement.
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.
As a potential buyer, it is really worth your while to explore every avenue to get a home loan as long as you can afford the payments and your job is stable enough to allow the commitment. - 16492
Banks are being cautious in light of the credit crisis, the National Credit Act and deteriorating economic outlook. Though the rate of home loan declines were down slightly, 1.4 percent, it doesn't really dent last month's rate of 51 percent.The second indication of the poor property market is that potential homeowners are finding it increasingly difficult to get financing for their properties.
Another reason for banks to tighten their lending is the rising number of homeowners who are late on their installments. In the third quarter of this year alone, the number of loans more than two months behind rose 21.5%.
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.
Another must, a sound credit rating. It is no longer enough to have a steady paycheck. Home loan applicants must be able to prove that you can make your installment payments and that you have not been late or defaulted on any other payments for at least two years before making your home loan application.
Lenders are looking for stability in their borrowers, as evidenced through a good record of paying of credit card debt. A history that shows you have already successfully managed a home loan will also go a long way with lenders.
If your history is not stellar, it is best to be honest. Lenders appreciate a borrower who is upfront about a rough spot in his credit history instead of trying to cover it up. Also, show that you are serious about your financial obligations by opening savings account for the express purpose of building a home deposit fund. The average deposit requirement is 10 percent, but this can vary from bank to bank, so do your research.
Make sure your monthly installment is no more than 30 percent of your monthly income. Less is preferable. Banks will not consider your application if the installment does not meet this requirement.
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.
As a potential buyer, it is really worth your while to explore every avenue to get a home loan as long as you can afford the payments and your job is stable enough to allow the commitment. - 16492
About the Author:
Tom Martens is the content coordinator for South Arica's leading Homeloans portal which amongst others offers origination services for ABSA home loans
