Self-employed still struggle to obtain bank home loans
Self-employed still struggle to obtain bank home loans
In spite of interest rates being at a 33-year low, banks remain very cautious in granting home loans, with all information submitted to them being thoroughly analysed to ensure applicants can afford to buy, says Kim Pistor, legal adviser and conveyancing manager for Rabie Property Group.
Pistor says although it is relatively straight forward to confirm the monthly earnings of salaried applicants, the same can't be said for those who are self-employed.
"In these cases supporting documentation is a key element in successful mortgage applications, and the banks require financial histories for the preceding two to three years.
"It usually t akes much longer to have bonds approved for these applications as they are often initially declined due to the various banks' tight criteria for self-employed individuals. Quite often clients find their own banks are not the ones that eventually issue approvals, so the services of a mortgage originator can be beneficial," says Pistor.
To assist residential buyers, Rabie has teamed up with John Savage and Liz Botha of Better Bond, who helped many of Rabie's buyers have mortgage finance approved at the best possible interest rates.
"A key bit of advice they give property investors is to check their own credit bureau reports annually as this is a critical part of the assessment process for mortgage lending," she says.
"Interest rates offered by banks can vary by as much as 1 percent, and applicants don't necessarily get the best rate from their own banks. Investors are sometimes disappointed that they can't get the same rate they were offered three years ago. But with the prime interest rate at 15 percent in December 2008 against the current 9 percent, the banks can no longer offer the previous average 2 percent discount on prescribed interest rates.
"The risk related to the loan now has more of a bearing on the rate discounts offered. In addition, applicants with positive credit ratings and deposits of 10 percent or more will be offered more favourable interest rates than applicants for 100 percent bonds."
Weekend Argus (Saturday Edition)
In spite of interest rates being at a 33-year low, banks remain very cautious in granting home loans, with all information submitted to them being thoroughly analysed to ensure applicants can afford to buy, says Kim Pistor, legal adviser and conveyancing manager for Rabie Property Group.
Pistor says although it is relatively straight forward to confirm the monthly earnings of salaried applicants, the same can't be said for those who are self-employed.
"In these cases supporting documentation is a key element in successful mortgage applications, and the banks require financial histories for the preceding two to three years.
"It usually t akes much longer to have bonds approved for these applications as they are often initially declined due to the various banks' tight criteria for self-employed individuals. Quite often clients find their own banks are not the ones that eventually issue approvals, so the services of a mortgage originator can be beneficial," says Pistor.
To assist residential buyers, Rabie has teamed up with John Savage and Liz Botha of Better Bond, who helped many of Rabie's buyers have mortgage finance approved at the best possible interest rates.
"A key bit of advice they give property investors is to check their own credit bureau reports annually as this is a critical part of the assessment process for mortgage lending," she says.
"Interest rates offered by banks can vary by as much as 1 percent, and applicants don't necessarily get the best rate from their own banks. Investors are sometimes disappointed that they can't get the same rate they were offered three years ago. But with the prime interest rate at 15 percent in December 2008 against the current 9 percent, the banks can no longer offer the previous average 2 percent discount on prescribed interest rates.
"The risk related to the loan now has more of a bearing on the rate discounts offered. In addition, applicants with positive credit ratings and deposits of 10 percent or more will be offered more favourable interest rates than applicants for 100 percent bonds."
Weekend Argus (Saturday Edition)
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