Although there has been on-going media coverage on this subject from the banks, home loan financiers and bond originators, many would-be home buyers still start looking for a home without first finding out from a qualified person, such as a Rawson Finance consultant, what they can actually afford, i.e. what the lending institutions will lend them as a mortgage bond.
Pointing this out recently to a group of estate agents at a Rawson Property Group training session in Cape Town, Mike van Alphen, National Manager of the Rawson Property Group’s bond origination division, Rawson Finance, said that agents must encourage potential buyers to first talk to a Property Finance Consultant who is qualified to advise on their financial situation. Not to do this, he warned, can only lead to frustration and disappointment.
“Typically,” said van Alphen, “the couple will go house hunting and find a home they really like. Only then will they start applying for finance – and at this point they may well discover that the banks are able, in terms of the National Credit Act, to lend them only 80% or 90% of the sum they require. This can be a heart-breaking situation, particularly if the couple has really ‘fallen for’ a house they have already seen.”
Situations of this kind, he said, would not arise if the buyers would go about their search in the recommended way, checking how the banks rate their borrowing power before they go house hunting.
A good bond originator, said van Alphen, will in many cases enable the applicant to buy above the level at which he thought the banks would cut him off, but again this can only be achieved with intensive consultation and some readjustment of the applicant’s finances.
