There are many members of the potential home owning public who are not as yet aware that they can apply for a bond via a bond originator and that in so doing they may well improve their chances of success or of getting more competitive terms.
“South African banks,” said Ria Venter, Regional Manager for the Northern Region and KZN of the Rawson Property Group’s bond origination division, Rawson Finance, “by and large have very good reputations for looking after their customers. It is therefore wholly understandable that many members of the public go directly to their banks for their home loans. Sadly, however, in recent years the banks have accepted only ± 50% of applicants and some people then give up on their hope of becoming home owners.”
This, said Venter, is a tragic mistake because Rawson Finance’s experience has been that at least 40% of those whose initial loan applications have been rejected will be accepted by another bank.
“Those unfamiliar with mortgage bond lending practices often do not realize that the risk profiles on which the banks work are by no means uniform: a risk profile unacceptable to one bank may be satisfactory to another. Many members of the public also probably do not realize that the banks’ credit appetite can fluctuate and can be influenced by various extraneous factors such as avoiding too much exposure to a particular area or one particular development.”
Bond originators, said Venter, will often submit an application to as many four banks and as a result are likely – if the applicant is creditworthy – to be able to offer better terms, primarily lower interest rates and a lower deposit, than the applicant might have got elsewhere.
Where the applicant has run into the quagmire of a bad credit record, e.g. through an unpaid store account, this will automatically result in his loan being rejected. However, a good patient bond originator, said Venter, in these circumstances can often help to rehabilitate the potential borrower. This, she said, can take anything from one week to six months, but it is definitely worth the client going through this process in order to get his name off the black list because so long as he features there he is debarred from credit of any kind.
Dealing with a bond originator, said Venter, costs the loan applicant nothing – the bond originator is remunerated by the banks. This is not, however, she said, always a one way traffic situation: quite often the banks will be more than compensated for the fees they have paid to the bond originator by the other services that they are able to tie the applicant into over a period of time, even in some cases establishing a new, full on bank account for him.
Should the valuation on the property that the client hopes to buy be declined by the bank on account of their being unable to see sufficient value in it, a further useful service that bond originators such as Rawson Finance can provide, said Venter, is to expose the banks to a different valuation.
“In these matters,” she said, “being linked, as Rawson Finance is, to a national property group is extremely helpful. We can often show the bank the latest up-to-date comparative market analyses from Rawson franchisees which will give a higher value to the property and therefore make the loan acceptable.”
For more information contact Ria Venter on 011 463 1092.
