Mortgage Lenders Are Tightening the Belts

Due to the global financial crisis mortgage lenders has been forced to review their lending policy. The banks are also feeling the crunch, and have had to make some tough decisions.

After finding that many clients are battling to service their mortgages the banks have had to repossess more and more properties. The problems increase when the mortgage lenders have to sell off these properties at a lower price than the owner’s outstanding debt.

Due to dwindling market prices, banks often find it difficult to recover the existing debt. If this happens once it won’t make such a big difference, but with increasing repossessions at a market that is deflated, it will hurt the bank in their bank vault.

Drastic measures had to be taken.

Instead of offering bonds of up to 108% of the purchase price, a first time buyer that needs a home purchase loan is now required to have a deposit of 10-20% of the purchase price. In addition, the buyer need to have sufficient funds to cover any fees involved in buying a property. This will ensure that the bank will be able to recover the full outstanding debt, should they have to go down that route.

This, in conjunction with more responsible lending and increasing interest rates, is making it more difficult for first time buyers to enter the property market. With more properties being on the market, but fewer potential buyers, will cause the purchase prices to drop.

Therefore, even though we are going through a global financial slump, with many, including mortgage lenders, fighting for their survival, there is light at the end of the tunnel. This is the opportune time to pick up bargains on the property market.

To apply for a home purchase loan, contact us and we'll be glad to assist: www.gpfmortgage.co.za

Home Loans – Step by Step

Owning your own home is very desirable. However, very few have sufficient funds to buy property cash, so they will turn to a financial institution for a loan. The loan will be given with the property as surety. So what are the different steps when purchasing a property using a home loan?

Step 1
Find out how much you can qualify for. Lenders will generally limit the amount you qualify for by only allowing you to use 30% of your gross income for the monthly bond instalment. This means you will be limited in the amount you can qualify and apply for.

So to avoid disappointment, first find out how much you can qualify for. Contact a GPF Mortgage to assist you with this.

Step 2
Start looking around for a property in your price class. When you have found a property you like, sign an offer to purchase.

Step 3
The offer to purchase will be presented to the seller, who will either accept or decline it. If the seller accepts the offer it is time to contact GPF Mortgage again.

Step 4
All documentation needed for the home loan application will be compiled and submitted to a financial institution.

Step 5
The financial institution will scrutinize the application, and valuate the property.

Step 6
The bank will make a decision regarding the loan application based on risk grade of applicant, affordability, and the value of the property.

Step 7
If everything is satisfactory to the bank, a Final Approval will be issued.

Step 8
Transfer and bond registration attorneys will be issued with instructions to transfer the property over to the seller’s name, and to register the bond.

Step 9
Both set of attorneys (in some instances the transfer attorney and the registration attorney can be the same) will contact client to arrange for him/her to sign the legal documentation.

Step 10
All documentation will be sent to the Deeds Office for registration of both bond and property transfer.

Step 11
The first monthly bond instalment will be due within 30 days of registration date

Step 12
The attorney will send the title deed and the bond documents to the bank for safekeeping.

You are now the proud owner of your own home.

To apply for a loan you will have to fill out a short application form. You will then receive a FREE quote from well established, nationally recognized lenders. You do not need to decide now whether the loan is for you.

Just apply and compare the repayments to your current situation. There is no obligation on your part. If you decide that it is not for you, you simply do not have to accept the offer. You have nothing to lose and everything to gain.