For aspirant homeowners toying with idea of taking the plunge, there is no better time than the present, says Samuel Seeff, chairman of the Seeff Property Group.
The interest rate cut has made housing loans cheaper; the banks are competing aggressively for home loan business and there is every reason for buyers to get into the property market, he says.
It is easy to find a willing bank, provided you qualify for a mortgage loan, and the process is fairly straightforward.
“You’ll need a clear credit record and positive credit score, proof of income and Fica verification of your identity and address. If self-employed, the process is a little more involved and you will need additional documentation.”
Seeff advises buyers to start with a pre-qualification to avoid disappointment and know exactly how much they can buy for. They can approach their own bank or a mortgage originator, which may be able to secure a better deal.
“Unless a first-time buyer, you will in all likelihood need to pay part of the deposit in cash. Budget for around 10% to 15%. You will also need to pay transfer duty (above R900000) and transaction costs. On a R1.5million property, this would amount to about R90 500 (inclusive of bond costs).”
Once you have found a property and an Offer to Purchase is accepted, a formal application for a home loan will need to be done. The bank will provide a quotation or pre-agreement, setting out the loan amount, proposed interest rate and terms upon which they are prepared to grant the loan.
“The applicant (borrower) then has five business days to shop around for a better deal or to accept the quote.”
Banks essentially look at affordability of the loan to the buyer and their assessed value of the property and will need to satisfy themselves that there is sufficient equity in the property, explains Sean Guy, sectional title division manager for Seeff Southern Suburbs.
“If the bank’s valuer does not find value, it may still grant a bond but based on the lower valuation of the property.”
Stand-alone residential dwellings are generally considered good security for mortgage lending, provided they are habitable and insurable and water and electricity are in place, and the bank can find sufficient value, Seeff says.
Sectional title schemes need to be in a good financial standing. Vacant land is not suitable unless it comes with a plan to build within six months.