Important tips for prospective home buyers be transparent
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Important tips for prospective home buyers be transparent and take care to make your bond application completely comprehensive.
Over 90% of all residential property buyers in Cape Town - and, indeed, throughout South Africa - have some form of financial funding. It may be as low as 20% of the total but very few homes are paid for entirely with cash.
In these circumstances, says Rowan Alexander, Director of Alexander Swart Property, the handling of the bond application becomes absolutely crucial it can make the difference between outright failure or full acceptance by the bank - and, if the application is accepted, it can determine whether the applicant is given a low or a high interest rate. A 0,5% increase in the interest rate, he points out, equates to an extra R 350 monthly payment on every R1 million borrowed. Although this may seem insignificant, says Alexander, the sum of the additional payments over the term of the loan amounts to R 84,000.
The secret of success in this field, says Alexander, is to make the application wholly comprehensive and to provide every piece of documentation that the bank might require.
Included in the list supplied to the bank should be three months' salary slips and three months' bank statements - if the applicant earns a fixed monthly income. If he is on a variable income arrangement, e.g. as a result of bonuses, commissions, overtime or dividend payments, then six months' payslips and six months' bank statements must be submitted.
It is, says Alexander, essential to be completely transparent and honest when dealing with the bank. Attempts to hide debts, 'cook the books' or conceal blemishes in a credit record will often be detected by the bank and could hinder the chances of the application being successful - or, if discovered later, could result in the cancellation of the bond.
Also, says Alexander, it is important to give as many contact details as possible all telephone, fax and cell phone numbers, email, street and postal addresses and any other contact data. Where there are more than one of these, all should be listed. The bank, he says, needs to be confident that they can contact their bondholder at anytime and anywhere.
Alexander also advises buyers to be cautious and to buy well within their means. Make allowance, he says, for extra, as yet unforeseen, expenses - these have a nasty tendency to crop up at the worst times - and settle for something less than your ideal in the home you make an offer on. If, later, the buyer has spare cash, let him overpay on the monthly bond payments and thereby create a financial buffer and shorten the time the bond will run. Also, always try to carry out improvements on your home. Every R1 spent on even a minor upgrade will immediately add R2- or more- to the value of the home.
Author: Independent Author
