Buyers
I often come across buyers who are really badly informed about the whole “Buying Property” idea and therefore it sometimes only stays an idea and never turns into a successful sale. By “successful” I do not refer to a willing buyer making an offer and getting it accepted by a wiling seller, NO, I refer to the transfer having gone through and money being in the bank!
As a buyer, there could be a lot that your agent is not telling you but he/she can also be telling you a bunch of nonsense, creating unrealistic expectations. So, what you need to know is the following:
When we look at the average selling property price in SA of +/- R 850 000, most banks would require a 0% to 15% deposit on the purchase price. I say 0% to 15% because some buyers do still qualify for 100% bonds but as a rule you should be prepared to pay a deposit. Going into the deal expecting 100% is unfortunately unrealistic.
Banks/Financial institutions do not finance any costs, any more, those were the good old days. By costs I include all transfer, registration fees, attorney fees, transfer duty etc and you have to know what you are committing to before you buy. There are many cost calculators and spreadsheets around where you can get a very accurate calculation of your costs ….. click here for link!
Buying for under R 600 000 does not mean that you won’t need to pay ANY costs. It only means that you are except from paying Transfer Duty which is the amount that goes to SARS. All the other costs associated to the transfer are still applicable. There are also separate costs associated with the registration of a bond, depending of the size of the bond …. all in the calculators!
Some buyers might be able to finance costs and deposits (or both) through a personal loan, sometimes even through the same institution that granted the bond. Whether this is a cleaver thing to do or not is a discussion you should have with your financial adviser but the fact is that this is the only way that some buyers can fund the cash obligation of the deal so that they can own property. Once gain, this is not the norm so do not expect to finance your costs/deposit this way.
So why do some buyers get 80% other 90% and other 100% bonds? Well, don’t expect the bank to come back with a better percentage than what you applied for in the offer but showing the bank that you have a 5% or 10% deposit in the offer is also a positive ingredient in the scoring process and in getting your bond approved. Credit is still a big issue, bad credit record = no bond, as easy as that. Scoring too low on the banks internal scoring criteria results in a “system decline” even before the application can be captured. Unfortunately we don’t really have any insight into the scoring criteria of the banks but making sure you have a clean credit record, no unpaid outstanding debts, no returned debit orders and that your employment and income can be verified at least gives you a better chance. Being self employed or working on un-regular and variable (commission) income is a bit more complicated but doable!
Getting finance to purchase a property is not the easiest thing in the world but being prepared and informed can make he process a lot easier for all the parties involved.
I hope this helps some of you, our future buyers out there ………..
Subscribe to:
Posts (Atom)