About Me

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I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.
Please visit our website at www.prop-law.co.za for more details.
I am an elected Committee Member of the Property Committee of the Association of Pretoria Attorneys and through my involvement, I like to ensure that I am constantly at the "sharp-end" of Conveyancing Practice.

I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.
Member of the Institute of Directors South Africa and Member of the Sirdar Governance Panel.

08 January 2013

Camps Bay's 'R300m mansion' under offer

Whilst it is interesting in a morbid way (because it's not me) that someone can afford this amount for a house, it is also interesting to note the comments of the major SA Estate Agencies at the end of the article regarding the general state of the property industry.

There are "green shoots" appearing in the American property market and because they lead the world into the worldwide property slump, I would similarly expect the USA to lead the world out of it.  I don't expect anything dramatic but hopefully a steady increase in 2013 will mean that by the start of 2014 we have experienced a significant improvement.

P.S. Message to Jawitz and Lew Geffen Sothebys :- I am currently available to register the R300 million property transfer.

Gareth Shepperson

Camps Bay's 'R300m mansion' under offer

Two offers have been made for a R300 million mansion in The Glen, Camps Bay - which, if sold, would be the highest price ever paid for a house in Cape Town and South Africa.

A foreigner and a South African "connected to politics" have put in offers for this R300 million Cape Town property.

Jawitz Properties director Francois Venter said one prospective buyer is foreign and has made an offer "in excess of R250 million" for the mansion.

The prospective buyer has until the end of the month to do a due diligence check on the property before committing to buy.

Venter said the second offer came from a South African "connected to politics", but would give no further details.

"It's difficult to confirm if R300 million is a good asking price for the mansion," said an estate agent who works in Camps Bay. "But it will create a buzz and you might get an ego buyer who has plenty of money."

When a story first appeared about the house on a specialist property news website in September, some readers reacted with disbelief and said the price tag was a marketing ploy. But property insiders say the property could well be worth that figure.

The house, known as "Enigma Mansion", is built on four erven on a combined plot of 7 130m², and is one of the most sought-after positions in the city.

The average size for an erf in Cape Town ranges from 500 to 1 500m², say estate agents. The norm for a two-bedroom flat, meanwhile, is only about 80m².

Jawitz, which shares a mandate for the house with Lew Geffen Sotheby's International Realty, boasts on its website that the mansion has "every possible luxury". This includes a specially designed Olympic-sized swimming pool and a 3D cinema.

The house also comes with a sauna, a "Balinese massage temple" and a tea temple, as well as winter, herb and vegetable gardens. Besides multiple garages, terraces and a staff cottage, there is a separate guesthouse on the spacious lawns.

If the house is sold, it would buck the trend of what Laurie Wener, managing director of Pam Golding in the Western Cape, says has been a slow time for houses priced over R10m on the Atlantic seaboard.

"Up to now the very top end has definitely been underperforming," she said.

While Andy Todd, principal of Seeff Properties for the southern suburbs, agrees that Cape Town's high-end property market was sluggish last year, he said that in general the property market has definitely improved. Turnover for Seeff in the southern suburbs has increased by more than 15 percent.

Todd said buyers were exhibiting less anxiety than in previous years. This has cased the Cape property market to first stabilise, then gradually start to grow again.

Danny Dreghorn, an estate agent from Dogon Group Properties, said the property market in Camps Bay had been showing positive growth in the past few months.

"We hit the bottom about the middle of last year."

He added that foreigners had stopped buying properties on the Atlantic seaboard about two years ago as the worldwide recession forced them to tighten their belts.

Since the middle of last year, however, growth had returned.

Cape Times

07 January 2013

Is it worth keeping a home loan open?

For all your Property Questions ... including the finacial aspects of all property transactions, contact Shepperson Attorneys and we will gladly help you.

Gareth Shepperson

Is it worth keeping a home loan open?

If your home loan is paid up or even in credit, you may still be liable for a monthly service fee.

The fee will be determined by when you entered into your home loan agreement or last amended it.

If your home loan agreement was entered into before the National Credit Act (NCA) came into effect, and no material changes have been made to your original agreement, the Usury Act maximum monthly fee of R5 (before VAT) applies. If it was after June 1, 2007, or if your original agreement was amended after the introduction of the NCA, you can be charged up to R50 (before VAT) a month.

First National Bank (FNB) client Mr BC complained to the bank that he is being charged a monthly service fee of R5.70 on a home loan account that has been in credit for the past 10 years.

Praven Subbramoney, head of product and marketing at FNB, says the bank is within its rights to charge a monthly administration or service fee on all its accounts.

"There is no mention in our documents, or in the regulations, of a rule to suspend fees when accounts are paid up or [in] any other instances. While we may have waived the fee in the past, we have re-evaluated our situation due to the economics of the product and, unfortunately, can no longer afford to do so," Subbramoney says.

The only way you can get out of paying the monthly service fee is by cancelling your mortgage bond, which will cost you about R2 500.

Subbramoney says many customers don't know that there's a cost to cancelling a mortgage bond. "This cost is paid [by the client] to an attorney to cancel the bond at the Deeds Office when the bond has been settled."

As soon as a bond reaches maturity (that is, when the full term of the loan period is reached), it has to be cancelled - and this service comes at a cost.

All the banks have their own "panels" of conveyancing attorneys to whom they give work.

Subbramoney says FNB Home Loans has negotiated with its panel of attorneys to discount bond cancellation fees to R1 400 for FNB clients. This includes the Deeds Office cancellation levy of R80.

Although it may cost you to keep a home loan account open - and you don't earn interest on a positive balance in a paid-up home loan account - the benefits of keeping your account open are that you have access to relatively cheap credit (in case of emergency) and you save yourself the cost of registering a new mortgage bond should you want access to a loan again.

Subbramoney says if you want to earn interest on a positive balance, you should open an investment or savings account. Clients are not encouraged to leave positive balances in their mortgage accounts "due to past experience with fraud and money laundering on these accounts", he says.

Clients at Absa and Nedbank are not charged a monthly service fee on home loans that have been paid up, but conditions apply.

At Absa, provided your account does not have a positive balance, you won't be charged a monthly service fee, Arrie Rautenbach, head of retail markets at Absa, says.

At Nedbank, you need to ask for your home loan account to be made "dormant", Charles de Winnaar, the bank's acting head of sales and customer management, says.

A monthly service fee will be charged where a home loan account has a zero or positive balance and the client has not asked for the account to be made dormant, De Winnaar says.

Like FNB, Standard Bank levies a monthly service fee on home loans that have been settled, because such accounts are still "active", Steven Barker, head of home loans at Standard Bank, says.

Barker defines "active" home loan accounts as those that are kept open for homeowners' insurance and customer convenience.

Even when the account reflects a nil balance, the bank is required by law to provide annual statements and notifications of rate changes, and must cover the cost of keeping the title deed. All these costs must be recovered, Barker says.

The "true cost" of running a mortgage bond is, on average, more than R100 a month, FNB's Subbramoney says. He says the bank incurs costs for managing home loans in the following ways:

•Capital costs: banks must keep capital to cover any available balances. This means the bank incurs a cost for any prepaid funds or credit that is available to you.

•Monitoring for fraud and money laundering.

•Monitoring of credit management and account conduct.

•Collecting debt from customers who don't pay.

•Ensuring safe custody of the bond and deed documentation.

•Day-to-day customer services and correspondence.

•Computer system and staff.

Similarly, the initiation fees on home loans don't cover the actual cost of bond origination, Subbramoney says.

"The actual origination cost to the bank is in the region of three times the fee recovered," he says.

The NCA restricts money lenders to an initiation fee of no more than R5 700 (R5 000 plus VAT).

Subbramoney says the advent of Basel III (a global regulatory standard on bank capital ade-quacy and market liquidity risk) will add to liquidity charges, affecting the interest part of the mortgage business.

"The reality is that if the banks don't find a healthy balance on the mortgage portfolio that is economically viable, they may need to rethink mortgage lending in totality," he says.

•If you have a home loan of less than R500 000 that was in force before June 1, 2007, when the National Credit Act (NCA) became fully effective, you should be paying no more than R5 a month to your bank or credit provider in administration or service charges.

The Usury Act, which governed home loans before the NCA became effective, set a cap of R5 (excluding VAT) for monthly service fees on home loans of R500 000 or less.

The Act was repealed and replaced by the NCA, which provides for a maximum monthly service fee of R50 (excluding VAT) on home loans.

However, a credit provider is not entitled to charge an administration fee in excess of the maximum set under the Usury Act on home loans granted before the NCA replaced the Usury Act.

This is in terms of a judgment handed down by the Supreme Court of Appeal at the end of last month, in the matter between the National Credit Regulator (NCR) and Standard Bank.

Standard Bank contended that the limit imposed on administration fees under the Usury Act did not "survive the transition to the NCA" as far as pre-existing home loans were concerned.

The regulator disputed this, and the Supreme Court of Appeal ruled in its favour, declaring that Standard Bank "is not entitled to charge an administration fee on housing loans that existed at the time the NCA came into operation in excess of the fee provided for in ... the Usury Act unless and until that fee is amended under the NCA".

If you took out a home loan before June 1, 2007, check your bank statements to ensure you haven't been overcharged for administration. If you find that you have, you can take it up with your bank or the NCR.

Steven Barker, head of home loans at Standard Bank, says all affected customers will have their monthly service fees amended back to R5 (before VAT) from January 1, 2013. Charges in excess of the Usury Act maximum will be fully refunded.

Angelique Arde
Personal Finance

Hartbeespoort Dam cleaner, set to be drawcard for tourists

On Saturday (5 January 2012), I spent the day with my family at Hartbeespoort going up the mountain on the "new" Cable Car.  The view from the top was breathtaking and I was astonished to see the city centre of Joburg from such an enormous distance away.

The dam also looked great from high above BUT when we drove over the dam wall we noticed that the water was luminous green and I for one would not want to spend any time near that colour water.

I think that the authorities have a long way to go still.

Gareth Shepperson

Hartbeespoort Dam cleaner, set to be drawcard for tourists

Hartebeespoort Dam starts off this year the cleanest is has been for years, say water officials.

"As Hartbeespoort Dam enters 2013 with the cleanest bill of health in years, tourists and anglers are encouraged to visit the shores of the dam again without concern over pollution or the lingering stench of dead plant material," says Gerard Smit of the Harties Metsi a Me (Harties My Water) programme.

The programme is a joint venture between the national Department of Water Affairs and Rand Water, and uses ecologically friendly ways to clean up the dam.

Smit says the Hartbeespoort Dam integrated biological remediation programme has been a huge success and has received international recognition as a case study on how ecological methods could turn ailing dams around.

"Where fungicide was sprayed in the past on the floating hyacinths, these and other invading plants matter are now harvested by hand," says Smit.

"Not only is this process more effective, but since 2008 it has consistently provided work for between 80 and 140 workers.

"They have successfully removed most of the hyacinths that once covered a large part of the dam's surface, as well as 2 400 tons of litter and debris, and 31 000 million litres of algae soup.

"Moreover, 190 tons of unwanted fish species were caught and sold cheaply in the community."

"Most of the eroded shorelines were rehabilitated, and floating wetlands that act as very effective filters to clean the water of pollution were established." Smit says the harvested plant matter, litter and debris was recycled, with organic matter composted through vermiculture, which uses earthworms. Locals started earthworm farms near the dam to feed into the programme.

Petrus Venter, Water Affairs' programme leader for the dam, says the clean-up has been running for four years.

It involved dealing with the catchment area as well as the dam. The catchment area includes more than 1 000km of rivers that feed into the dam, he notes.

The clean-up was hampered by a lack of local information on how pollution affects the dam, so initially, officials had to use international information.

"The principle of this remediation programme has been one of conserving, protecting and managing natural resources towards achieving optimum biodiversity," according to Venter.

"The deterioration of this dam, used as a major recreational area for Gauteng and North West residents, as well as the water source for both human consumption and irrigation for Brits and its surrounding agricultural community, has been laid firmly at the door of humans acting irresponsibly with nature's resources.

"We now try to educate as many people as possible at a special communication centre that has been set up at the dam about the effect of ecological footprints."

The Star

Have your say on Pretoria CBD street closures

I go into the Pretoria CBD on virtually a daily basis to attend to registrations at the Deeds Office.

I therefore have personal experience of the agony of searching for a parking place.  It is infuriating when you are in a rush and can't find a parking.

I applaud the City for taking the initiative to try and improve the CBD but by blocking off access and removing parking bays, I am not sure that the City's efforts will have the desired result.

Gareth Shepperson

Have your say on Pretoria CBD street closures

The public have been given a chance to have their say on the Tshwane Metro Council's plans to restrict traffic in certain streets in Pretoria's inner city.

Paul Kruger Street is one of the city streets set to become traffic free as part of Operation Reclaim.

The restriction of traffic in these streets is part of the municipality's Operation Reclaim, aimed at revitalising the CBD.

A notice in last week's Government Gazette said the municipality had appointed Mashabane Rose Architects and Urban Designers to undertake a Heritage Impact Assessment (HIA), public consultation and to propose urban intervention.

The streets to be upgraded are Lilian Ngoyi (Van der Walt), between Pretorius and Madiba (Vermeulen); Sisulu (Prinsloo) between Madiba (Vermeulen) and Pretorius; and Helen Joseph (Church) between Du Toit and Thabo Sehume (Andries).

The metro council said: "This is a pilot urban intervention to pedestrianise the identified routes with an intention to reclaim the precinct for... non-motorised users."

The chairman of the Inner City Improvement District (ICID), advocate Salim Yousuf, said this was an attempt to introduce a draconian law to effectively and forcefully preventing visitors with vehicles from entering the city centre.

He said the mayoral committee member for city planning and economic development, Subesh Pillay, was on record as saying that it would cause a temporary inconvenience to business.

"Our concern is that the proposed operation (Reclaim) to block main arterial routes would be catastrophic to businesses in the inner city. We have formally objected to the proposed closures and are prepared to take the matter on review on the basis that the CTMM (City of Tshwane Metropolitan Municipality) is acting unreasonably and irrationally," he said.

Yousuf said the municipality had so far failed to respond to the ICID's concerns that the proposed closures were not economically or socially feasible.

The ICID had submitted its objections to the metro council's strategic land development tribunal. "The backlog in upgrading and inadequate maintenance programmes greatly contributes to underdevelopment in the inner city," Yousuf said.

He added that clearly demarcated parking bays and the management of parking "is grossly neglected".

Informal trading was also poorly demarcated and managed, he said.

"Poor traffic control, by-law enforcement and the low visibility of the TMPD (Tshwane Metro Police Department) during peak traffic times are primarily the reason for traffic congestion," he said.

Inner-city businesses had the advantage of being easily accessible by vehicle or foot, Yousuf said.

"Attempting to limit vehicle and parking in the inner city would prejudice the capacity of the retail and services sector," said Yousuf. The ICID has requested:

Detailed design and structural plans by the transport department, showing the impact of diverting traffic flow and the resultant compromise of parking bays;

Detailed management plans allowing vehicle access to existing, and bona fide, parking on private properties;

Management plans allowing bona fide access, eg deliveries by vehicles and collection of goods and bulk goods by shoppers;

Alternative parking to existing street parking bays that will be compromised by Operation Reclaim;

The City of Tshwane's budget for investment in ageing infrastructure of parking, public toilets, taxi parking bays and informal trade;

Simulation on traffic flow indicating whether the partial street closures will have a positive impact on traffic flow.

Copies of the HIA and further particulars of the intended project are open for inspection from 7.30am to 4 pm for the rest of the month at Es'kia Mphahlele Library, Sammy Marks Square, corner Madiba (Vermeulen) and Sisulu (Prinsloo) streets, or call 012 358 8710/1077.

Comments on and objections to the HIA must be lodged with Mashabane Rose Associates on or before February 4. These can be posted to Mashabane Rose Associates, Suite 246, Private Bag X2600, Houghton 2041.

Pretoria News

18 December 2012

Rise in new wealth bodes well for residential property

Rise in new wealth bodes well for residential property

Recent reports of current annual growth of 31% in the ranks of the wealthy in South Africa (compared with 19% in 2010) is good news for prime residential property says Gauteng luxury homes marketer Ronald Ennik.

"Firstly, it will create a welcome new layer of buyers of luxury homes. Secondly, the sustainability of the top end of the market will be reinforced as more and more of the new wealthy buy into it.

"Thirdly, it will compensate for the (hopefully temporary) withdrawal of foreign investors who, in spite of the attractions of the weaker Rand, seem to be adopting a wait-and-see strategy based on recent negative socio-economic and political developments in South Africa," says the CEO of Christie's-affiliated Ennik Estates.

•Meanwhile, in the recently published global Wealth Report 2012, Renato Grandmont, chief investment officer for Citi Wealth Management and Citi Private Bank in Latin America, picks Johannesburg as one of the world cities of the future (along with Cairo, Lagos, Mumbai...and other well-established centres such as London, New York and Moscow).

"This comes as no surprise," says Ronald.

"With its world-class infrastructure, Johannesburg remains the port of entry for foreign business visitors to Africa - and particularly the fast-growing Southern African region.

"As a result, upmarket Sandton, is now by far the most favoured base for foreign corporates intent on establishing operating footholds in the region," says Ronald.

"This has hugely favourable implications for Johannesburg's luxury residential property market," he concludes.

Ennik Estates Press Release

12 December 2012

Middle segment property values rise 5% on Absa index

Middle segment property values rise 5% on Absa index

Middle segment property values increased by 5 percent year on year last month following a revised 3.3 percent year-on-year rise in October, according to the latest Absa house price index released yesterday.

However, Absa said average house prices in the first 11 months of this year were unchanged compared with the corresponding period last year.

In addition, Absa said although the year-on-year growth in the average value of homes in the middle segment of the housing market increased further last month, month-on-month house price growth continued to be on a downward trend.

This trend commenced at the middle of this year and was expected to affect year-on-year house price growth "in the near future", said Jacques du Toit, a property analyst at Absa Home Loans.

Du Toit said real price deflation was still evident in the middle house segment up to October but the downtrend was being arrested, with the smalland medium-sized categories showing some real year-onyear growth in October. Real house prices are adjusted and deflated to take account of the impact of inflation.

Du Toit added that relatively low nominal house price growth was forecast for the next 12 months and with headline consumer inflation projected to average around 5.5 percent next year, some real house price deflation might still occur for most of next year.

FNB reported last week that while the housing market, along with house price growth, did experience some improvement in strength earlier this year, the pace of improvement appeared to have been tapering off and was reflected in the slower growth in house prices.

Its house price index slowed further last month with yearon-year house price growth dropping to 0.5 percent.

John Loos, a household and property sector strategist at FNB Asset Finance, said this was the eighth consecutive month of tapering growth since the relatively impressive 8.4 percent peak in year-on-year growth reached in March this year.

FNB said the average value of home transactions on its index was R819 733 last month.

Business Report

Super rich flock to Sandton, Cape Town central

Super rich flock to Sandton, Cape Town central :

Where do South Africa's wealthiest people live? A report from London-based consultancy Wealth Insight sheds some light on their geographical distribution.

With 36 multimillionaires, Sandhurst accounts for the largest proportion of Johannesburg's ultra high net worth individuals (UHNWIs). Bryanston accounts for the second-largest percentage, "although it is a significantly larger suburb than the likes of Sandhurst, Hyde Park and Westcliff ", the report notes.

"The area known as Sandton, which includes Sandhurst, Sandown, Morningside, Hyde Park, Melrose, Atholl and a number of other suburbs, is home to over half of Johannesburg's UHNWIs."

The report also notes that a number of South African companies moved their head offices to Sandton, following a rise in crime in Johannesburg's city centre between 1990 and 2000. "Most notably, the JSE moved to Sandton in September 2000 from the central business district. Sandton has continued to grow strongly between 2000 and 2011 and is considered to be the banking and wealth centre of South Africa."

Central Cape Town accounts for the highest proportion of that city's UHNWIs (17 percent). The bulk of these are based in the Waterfront Marina, Higgovale, Green Point, Oranjezicht and Tamboerskloof.

According to Wealth Insight research, Camps Bay, in second place, is home to the largest number of South African homes worth more than R20 million, while Clifton, in third place, is home to the largest number of South African homes worth over R50m. Clifton is also the most expensive residential area in the country.

Clifton and Bantry Bay in particular are hotspots for wealthy foreign billionaires who own some of the largest properties in these areas. The report notes: "These individuals are not included in our count as they are based in other countries. Other wealthy Cape Town areas with more than one billionaire include Hout Bay, Newlands, Upper Claremont, Kalk Bay and Simon's Town."

Business Report

10 December 2012

Diepkloof Square community shopping centre opens in Soweto

Diepkloof Square community shopping centre opens in Soweto

Soweto entered a new era of convenient, quality retail when Diepkloof Square community shopping centre opened, fully let, on November 29.

Diepkloof Square in Soweto opened last month.

The 16 108 m2 community centre is anchored by Pick n Pay in a 3 112 m2 store and features 50 shops, including a new 1 720m2 Food Lover's Market.

"Diepkloof Square is a really exciting project," says Food Lover's Market group property and business development manager Graeme Liebenberg. "Diepkloof holds a special place in the heart of many South Africans.

"It was one of the earliest communities in Soweto and many influential South Africans live, have lived or passed through this suburb."

In the epicentre of affluent Soweto, Diepkloof Square is positioned in an exciting setting in a growing community in Diepkloof Extension 3 near the N1, with excellent visibility and access from the main arterial road serving Diepkloof, Immink Road.

"Diepkloof Square will provide quality retail in a smart, modern setting - giving residents easy access to tailormade convenience shopping," says Jason McCormick, the managing director of developer McCormick Property Development.

"The centre pays meticulous attention to top design, apt retailer mix and the daily shopping needs of one of the wealthiest township suburbs in the country."

Highlighting its thoughtful design, McCormick points to Diepkloof Square's covered food court as a vibrant space for the community. "Diepkloof Square is more than a shopping centre, it's a town square - a place to meet and share a sense of community."

McCormick Property Development has pioneered retail development in South Africa's emerging markets since 1983 and has 49 completed developments to its name.

For Diepkloof Square's development, McCormick partnered with leading African black-owned and managed investment holding company Shanduka Group.

Leasing Diepkloof Square is Retail Network Services - a full-service specialist retail leasing company with successes such as Pan Africa Shopping Centre in Alexandra, Protea Glen Shopping Centre in Soweto, Tsakane Mall in Springs and Jabulani Mall in Soweto to its name.

Gavin Tagg, of Retail Network Services, says the shops and services at Diepkloof Square mirror its upmarket setting.

Yet despite this they still offer a large assortment of grocery and food stores to cater across income groups.

"Diepkloof Square features an array of leading retailers which appeal to everyday needs of this growing local market," he says.

In an area previously underserviced by shopping, retailers have lined up to satisfy Diepkloof 's consumer needs. Besides Pick n Pay and Food Lover's Market, its retail mix includes Ellerines, Beares, OK Furniture, JD Group, McDonalds, King Pie, Steers, Debonairs, KFC, Old Mutual, Nedbank, Standard Bank, Cashbuild, Roots, Vodacom, Pep, Modjo Hair, Randcon Paints and Diepkloof Medical Centre.

With its prime location, modern design, exciting retail mix and unmatched local shopping experience, Diepkloof Square also offers generous parking and excellent access to public transport with an adjacent existing taxi rank.

"Diepkloof is a strong community with ample amenities that create a vibrant node for its residents and form a natural retail node," says Tagg.

"It is attracting an increasing number of middle-class and aspirant residents.

"Diepkloof Square is set to become the dominant retail node in the Diepkloof area and its surrounding suburbs."

Weekend Argus (Sunday Edition)

How to build a credit history for your home-loan

How to build a credit history for your home-loan

Contact us for advice and assistance. (www.prop-law.co.za)

In today's real estate market it is imperative for consumers to establish an excellent credit record and maintain it.

By establishing a credit history, consumers ensure their best possible chance of bond approval, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

"Having a favourable credit record is essential for consumers who aspire to own property. While lending criteria is not as stringent as it was when the National Credit Act (NCA) was initially introduced, the requirements in the current market are still strict and it is likely to remain that way for some time," he says.

"Just as important as a positive credit score is an established credit history that shows that the consumer can conduct their credit responsibilities in a favourable manner. A consumer's credit history will have an impact on whether or not the loan is granted and if the loan is granted, it will influence the interest rate at which the bank will finance the deal. Financial institutions use this information to assess the probability of the applicant defaulting on their payments, which will in turn give them an idea of whether or not granting the loan is a high risk. Those who have finished their studies and are preparing to enter the job market will need to ensure that they take the necessary steps to build a good credit history."

According to Goslett, financial institutions will generally look at how a prospective homebuyer has conducted their credit accounts over the last six months, so if an applicant wants to ensure an optimum chance for approval, they will need to have an excellent credit record and history for at least the six months prior to submitting their application. He notes that establishing a credit history is slightly more challenging due to the fact that lenders are extra cautious of new applicants. Goslett offers a few tips for so those who want to establish a credit history and are applying for credit for the first time:

•Easy does it

Don't apply for too much credit at once and only apply with a reputable credit provider. Goslett says that it is best to start off slowly and only apply for small amounts that are easily manageable. He explains that applying for too much credit will send the incorrect message to the lender and they will think that you are desperate. It is also important to only make one application at a time, as too many applications for credit facilities will have a counterproductive effect that could negatively impact the consumer's credit score. Pay down accounts as soon as possible, and be sure you don't take out more credit than you can afford to pay back.

•The power of three

As a general rule the consumer will require at least three lines of credit. With less than that the credit history might be considered to be too thin, however with more it may be considered too much. Goslett says that the golden rule is for consumers to make sure that they always leave a 30% or higher gap between what they owe and the credit limit as lenders will look for this minimum gap. It is also vital to still have the necessary disposable income required for bond approval in the future, so work out a strict budget and stick to it.

•Have different types of credit

The credit score algorithm likes to see different kinds of accounts. Applicants should not just have revolving credit, but where appropriate, a closed-end loan or account such as a car loan. Goslett says that how the various accounts are managed is more important than the variety of the credit. He notes that is very important that all accounts are paid according to the loan agreement and no late payments are made. This will reflect responsible financial behaviour.

•Deposit money into a savings account

Start to build a good bank account balance by depositing money into a savings account each month for your home loan deposit, as this will show financial stability. Goslett says that the fact that you have a deposit saved up will stand you in good stead and improve your bond approval chances.

Goslett concludes by saying that consumers should remember that even with an established credit history and excellent record, homeowners will need to be able to afford their monthly repayments. Affordability and disposable income will remain the crux of the bond approval process in the year ahead.

RE/MAX Press Release