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.
The second indication of the poor property market is that potential homeowners are finding it increasingly difficult to get financing for their properties. 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.
Another reason that banks are clamping down on their lending is because of the increasing number of late payments by homeowners. In just the third quarter of the present year, loans that were more than two months late increased by 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.
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. Another must, a sound credit rating. It is no longer enough just to have a steady paycheck.
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 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 goal that you are looking to achieve is to make your monthly installment less than 30% of your monthly income. You will not even be looked at by a bank if your installments are more than that.
All in all, today's property market is fraught with frustration. On the one hand, sellers are having a difficult time finding buyers and are being forced to accept lower offers, which is great news for buyers. On the other hand, potential buyers are struggling 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. - 16463
The second indication of the poor property market is that potential homeowners are finding it increasingly difficult to get financing for their properties. 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.
Another reason that banks are clamping down on their lending is because of the increasing number of late payments by homeowners. In just the third quarter of the present year, loans that were more than two months late increased by 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.
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. Another must, a sound credit rating. It is no longer enough just to have a steady paycheck.
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 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 goal that you are looking to achieve is to make your monthly installment less than 30% of your monthly income. You will not even be looked at by a bank if your installments are more than that.
All in all, today's property market is fraught with frustration. On the one hand, sellers are having a difficult time finding buyers and are being forced to accept lower offers, which is great news for buyers. On the other hand, potential buyers are struggling 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. - 16463
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
