Take care when looking for easy finance

With many bond applicants held back by the strict National Credit Act rulings, some will start looking for more easily accessed finance. If they do this they must act with extreme care, says Lanice Steward, MD of Anne Porter Knight Frank, the Cape Peninsula estate agency.

“Caveat Emptor – let the buyer beware – has always been a sound principle in any sale negotiation but it is never more relevant than when it applies to the raising of finance to purchase,” said Steward.

Suspicion, she said, should always be aroused in the buyer’s mind if and when exceptionally good financial packages become available for the home buyer. The question should always be asked, “How and why is this organisation able to undercut the long established banks and finance houses, whose offerings tend to be very similar.”

Recently, said Steward, a so-called specialist finance group has been offering mortgages at 6%, 3% below the best rates obtainable from the traditional financiers.

“That in itself should have sounded alarm bells but they should start ringing even louder if the applicant is expected to put down an initial deposit.”

Anne Porter Knight Frank, said Steward, had a client interested in this bargain package but after being asked on several occasions asked for a guarantee, these had not been produced.

"We then discovered from a report in the press that two Cape Town businessmen had been arrested in connection with the same company.

“The indicators all point to the possibility of a scam having been set up,” said Steward, “South Africans, now approached almost weekly by Nigerian and other groups out for a quick illegal buck, must bear in mind the Masterbond debacle – and the lesson that should be learned is that when the terms and conditions are way better than average, someone is likely to be taking shortcuts.”

Article by: www.anneporter.co.za