Work out what bond you as a Purchaser should qualify for
The loan amount you can qualify for is limited by your monthly income and by your total disposable income. Only 30% of your income can be used to pay towards a home loan.
The National Credit Act has taken this one step further and banks are now required to ensure you have enough disposable income to support a bond repayment. Thus the way in which purchasers are assessed has changed.
To work out how much you qualify for:
Calculate 30% of your monthly income:
ie: R30 000.00 per month will be R10 000.00 – the bond amount would be limited to a maximum of R10 000.00. You will then have to list ALL your current expenses, including fuel, petrol, school fees, etc and prove that you can in fact actually afford to repay R10 000.00 per month back.
If after ALL expenses are deducted, you are only left with R6 000.00 then a bond with a repayment of R6 000.00 is all you will qualify for even though it is less than their 30%. Also remember that the bank looks at your credit record – do you pay your accounts on time? Are you black listed etc.
The good news is that if you are currently paying rent – this amount is added to your disposable income.
This article has been reprinted with the kind permission of Masilo Freimond Inc.
Tel : 011 958 0488
Fax : 086 610 0276
E-mail : info@masiloincjhb.co.za
Positive Feeling for Property 2011
The residential property market has several factors in its favour going into 2011:
- exceptionally low interest rates
- slower-than-expected consumer price inflation
- decreasing levels of household debt
Where you aware that the interest rate is the lowest it has been in 36 years?
With decreasing household debt couples can now consider purchasing a home of their own. Banks will be more favourable to granting a higher percentage bond. Low interest rates are already helping the property market by putting extra money into household piggybanks and boosting the demand for credit such as home loans.
Economists are predicting another rate cut early in the year, which can only be good news to consumers.
Standard Bank has estimated that inflation will average 4.6% y/y in 2011, so even if house prices only grow at 7% – which we think is what we can reasonably expect – these will still beat inflation in most cases.
Experts predict there will be a noticeable growth in the “small house” segment sales. All in All there is an atmosphere of positivity for the property market. Although property won’t boom, there will definitely be growth. Purchase Price will still remain a strong factor. The general feeling is that buyers. Similarly, while access to shops, schools and major transport routes is still important, these are also secondary considerations to price and running costs in almost every case.
There is a general feeling of positivity and growth for the property market for 2011, although there consensus that we cannot at this stage expect a property boom.
This article has been reprinted with the kind permission of Masilo Freimond Inc.
Tel : 011 958 0488
Fax : 086 610 0276
E-mail : info@masiloincjhb.co.za
Call To Reduce Electricity Use
“Heavy rains have hampered the supply of coal to Eskom power stations and the utility has now put 500 of its largest customers on a mandatory energy conservation scheme in order to cut electricity consumption in the country.”
It is a Great Time to Buy, but don’t Overspend
Homebuyers should never jump into the market with their eyes shut, even at times like these, when the combination of low interest rates and still-low property prices is creating some wonderful purchase opportunities.
Berry Everitt, CEO of the Chas Everitt International property group, says potential buyers – and especially those entering the market for the first time – should never lose sight of their own personal and financial circumstances, or of the fact that interest rates can go up just as easily and quickly as they come down.
“The low interest rates at the moment obviously do make it much easier to qualify for a home loan, to afford the monthly bond repayments and municipal charges, and to have money left over to keep the home in good condition.
“And as I’ve said elsewhere recently, prices in many areas are still below their pre-recession levels, which at the moment means that the sooner you buy, the better deal you are likely to get for your money.”
But it is extremely important, he says, for homebuyers not to purchase more home than they actually need just because it is “going cheap”, and vital that they leave themselves lots of leeway when working out what monthly bond instalment they can afford.
“Indeed, I think that buyers should always squeeze the price and not their budgets. What I mean by that is that rather than first finding a home to buy and then stretching the household budget to the limit to get the loan and afford the repayments every month, potential buyers should first take a hard look at what instalment they would feel comfortable paying, subtract some of that amount to allow for contingencies like the interest rate going up, and only then go shopping for the best house available in their price range.”
Everitt says good rule of thumb is that a new home should not cost more than 2,5 to three times the annual income of the family.
“So if your combined annual salary is R300 000, you should be looking at homes priced at R900 000 at most in order to keep up comfortably with the bond repayments once you have paid a deposit of at least 10%.”
Potential buyers, he says, should also bear in mind that the banks do not look at home loan debt in isolation. “Since the introduction of the National Credit Act, they have also been obliged to look at your overall financial situation – including debts such as car and credit card repayments as well as your regular monthly expenses such as school fees, insurance, food and transport costs and water and electricity accounts – before granting a home loan.
“And before you rush out to buy a home, I suggest this is what you should do, too, to ensure that all your debt commitments together will be manageable, even if interest rates rise. For peace of mind in this case, I would suggest that your total monthly debt repayments, including your bond instalment, should not exceed 40 percent of your income – which means they should add up to R10 000/ month or less if your combined monthly income is R25 000.”
This article has been reprinted with the kind permission of Chas Everitt International.
Barry Davies
011 801 2500, or visit
www.chaseveritt.com
Page Link: http://www.chaseveritt.com/html/press.html
Tentative recovery likely, Bank warns
The leading indicator of business activity in SA dipped slightly in August after a strong rise in July, adding to evidence that the recovery is tentative and may slow down over the rest of the year.
The leading indicator, which points to trends six to 12 months ahead, declined 0,1% in August, after a robust 1,3% rise during the month before, figures from the Reserve Bank showed.
The Bank’s economist, Iaan Venter, said that while it was dangerous to look at one month in isolation, the monthly dip was part of a sideways trend, suggesting that growth remained subdued.
“I still believe it’s indicating a moderate growth trend,” he said.
Other figures yesterday showed that company failures rose 2,1% last month compared with September last year, after a fall of 8% in August.
“Business is still struggling,” Investec economist Kgotso Radira said. The data from Statistics SA did not bode well for household finances and consumption going into the festive season, he said.
Consumer spending is the economy’s main growth engine, accounting for 60% of demand.
“This is a further indication that more jobs were lost in the third quarter of this year,” Mr Radira said in a research note.
“Employment growth is only expected to start emerging in the latter part of 2011 when growth starts gathering momentum.”
SA’s economy shed more than 1-million jobs since the start of last year, making it one of the hardest- hit emerging markets during last year’s recession, in terms of jobs.
Last week, Finance Minister Pravin Gordhan said the economy would expand faster this year than the 2,3% predicted in the national budget last February.
Updates to official forecasts are due in the Treasury’s medium- term budget policy statement tomorrow, with market consensus betting the economy will grow about 3% this year. The Treasury’s estimate will probably be lower, reflecting its traditional caution.
The “basically unchanged” leading indicator pointed towards “stability and recovery” in the economy, said Brait ’s Colen Garrow.
But no one should be “wildly optimistic” that growth would be more than 3% this year.
Mr. Garrow sees the economy expanding just 2,3% next year — well below market consensus.
The Reserve Bank’s data showed that six of the leading indicator’s 11 components were negative during August.
This included the average number of hours worked by factory employees, probably due to strikes in the vehicle industry.
Building plans approved also had a negative effect.
The value of plans passed by municipalities between January and August this year fell 7, 8%, or by R3, 3bn, compared with the corresponding period last year, official data showed last week.
The weak performance of the leading indicator was in step with SA’s main trade partners, according to the Bank’s data yesterday.
Compared with the same month last year, the index rose 18,8%, but this reflects the “base effects” of last year’s recession.
It was also lower than the 20, 4% increase seen in July.
This suggested that although growth in the economy would slow in the months ahead, it might not be as severe as expected given strength in the rand, Stanlib economist Kevin Lings said.
The rand scaled a 33-month peak at R6, 76 to the dollar earlier this month, but has since relinquished some of its gains, trading at R6, 90/ yesterday.
“There is a reasonably good relationship between the leading indicator and overall economic activity,” Mr. Lings said.
“This suggests that the South African economy should show solid growth in 2010, with some loss of momentum into the second half of this year … but not a very significant slowdown,” he said.
Last month’s rise in liquidations was driven by failures in finance, insurance, real estate and the business services industry. Most were voluntary.
Other data from Statistics SA yesterday showed that the number of individuals and partnerships that were declared insolvent dived 47,2% in August compared to the same month last year.
That was the ninth successive year-on-year decline.
This was “further evidence that the number of individuals and partnerships that cannot pay their debt is declining relative to last year”, Mr. Radira said.
Household finances would take some time to improve due to high debt levels — which are still hovering at 87% of disposable income — and the rising cost of living, which was outstripping growth in income, he said.
“The deleveraging process will take some time … the rapidity will largely depend on the pace of employment growth.”
The indicator has a good correlation with the Organisation for Economic Cooperation and Development (OECD) leading indicator, which tracks the global economic cycle, with a short lag.
The OECD leading indicator has moderated downwards slightly on an annual basis over the last few months, suggesting that SA’s leading indicator would also move lower in the months ahead, Mr. Lings said.
Written by Alistair Anderson
This article has been reprinted with the kind permission of Betterbond
Tel: 011 516 5500
Fax: 086 677 1162
Website: www.betterbond.co.za
Things just got a whole lot Better
We are heading into the end straight of 2010, a year that has held hope for a recovery from the doldrums of 2008 and 2009. While the outlook does not look terribly rosy for consumers as far as their debt-to-income ratios are concerned, the hope for improved market conditions has been vindicated to a degree, particularly for the property industry, with estate agents around the country reporting an increase in sales volumes.
However, affordability will continue to feature strongly as the National Credit Regulator’s first quarter report indicated that credit bureaus had records for 18.21 million credit-active consumers as at the end of March 2010. Of these credit-active consumers, only 54% were classified as in good standing while the number of consumers with impaired records continued to increase reaching 8.37 million. This h indicated a deterioration in the credit records of 191 000 consumers quarter-on-quarter and 915 000 year-on-year.
However, while consumer’s debt issues have not shown much of an improvement, the continual steady increase in market activity has restored faith in property as an investment and as a career option. But it is only those forward thinking, solution-oriented people who need apply – real estate is no longer merely an order-taking business, but rather one where agents need to be motivated, professional, innovative and involved in order to make their mark. There are those individuals who excel at this, who go above and beyond to elevate their communities, the industry and their careers in real estate as was evident at this year’s annual Nedbank Property Professional of the Year awards.
For the past 11 years the winners of the coveted Nedbank Property Professional title have raised the bar, and this year was no different. Congratulations to the overall winner, all 16 finalists whose incredibly high standards made the competition tougher than ever, as well as the Young Lions, Movers & Shakers and other award recipients. At the end of the day, achieving success comes down to how you create and establish your own personal brand.
If you live up to your brand promise, your brand can be a strong marketing tool that will ensure loyalty, repeat customers, and ultimately, success. This is one of the reasons that the PA Group has embarked on a rebranding campaign that is currently being rolled out. Up until this point in time, the PA Group and its subsidiary companies followed a multi-branding strategy. This means that none of the names are related and all the different companies function independently of each other in the market place.
However, as the storms of the recent recession set in, it became evident that a multi-branding strategy is more costly to support and didn’t allow for the optimisation of synergies that exist between the different subsidiaries of the PA Group. After much deliberation it was decided to move from a multi-branding strategy to a single-branding strategy, where the subsidiaries of the PA Group will become interlinked. As South Africa’s leading mortgage originator, the Betterbond brand was the best known in the Group, so we decided to leverage off the name by adding “Better” as an adjective to both the Group and its subsidiaries. This means that the PA Group has changed to BetterGroup, Betterbond has changed to BetterBond, Paforma has changed to BetterBridge and Aspire has changed to BetterCredit.
The Group’s new slogan, “Getting you Ahead”, is central to its value proposition of getting you ahead by streamlining the home loan application process, organising quick access to funds in terms of bridging finance and all in all providing a better service than ever before.
They say that a chain is only as strong as its weakest link – now the PA Group’s link will be as strong as the brand that it is building up. In line with our new brand identity, we have also introduced a new icon of two interlinked circles. The icon will ‘link’ all the companies in the Group together and also represents what we do in linking clients to their home by facilitating the home loan. In the same way we bridge or link clients with funds through providing bridging finance. The same holds for BetterSure and BetterCredit. No experience, prestigious award or qualification will ever make a lasting impression if you don’t proactively and consistently build and manage your personal brand and reputation with integrity. As Abraham Lincoln said, “Character is like a tree, and reputation is like a shadow. The shadow is what we think of it; the tree is the real thing.”
Written by Rudi Botha
This article has been reprinted with the kind permission of Betterbond
Tel: 011 516 5500
Fax: 086 677 1162
Website: www.betterbond.co.za
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