New approach needed to obtain mortgages

With up to 70% of bond applications being turned down by banks, consumers need to rethink their approach to buying property.

This is the view of Paul Joubert of the RealNet office serving Vereeniging and Sebokeng in the Vaal Triangle, who is now offering basic courses in property affairs as a value-added service to local property consumers.

“Unsuccessful credit applications often have less to do with affordability than with lending criteria,” he says. “The landscape has changed dramatically and my advice to any prospective buyer is to consult with a trained estate agent even before starting to look for suitable property.”

Due to legal requirements and in view of the global credit squeeze, banks are cherry-picking among credit applications, and prospective buyers can unwittingly harm their own prospects of obtaining mortgages through a lack of knowledge about the application process, he adds.

“For instance, few buyers realise that they might scupper their chances of a mortgage by applying for credit at several banks at the same time. In terms of financial transparency, banks know when more than one application has been lodged and may give preference to single applications.”

Another factor that contributes to successful applications is a squeaky clean credit record. “Banks pay particular attention to prompt payment of bills and some banks will not even consider an application within six months of a late payment, be it on an account with a store or another supplier, and no matter what the reason for the delay or the size of the bill.”

Joubert says that in a fast-changing environment it is difficult for property consumers to stay up to date with developments. “To this end, we not only offer consumer courses, but also train our agents on a continuous basis. Apart from the thorough ongoing training offered by the RealNet group, our agents also meet with bond originators once a week, for example, to keep a finger on the pulse of developments in that industry.

“This enables them to customise a plan of action for individual buyers and target the lending institution where they are most likely to obtain finance, even before the house hunt begins.”

Article by: www.realnet.co.za