South Africa is certainly starting to catch up with the rest of the world when it comes to transacting online. From e-retailers to e-insurers, you can find just about anything you can think of online, including online loans in South Africa. When it comes to applying for credit though, what can an online service provider [...]
Home Loans - Approved Loans
What is a Home Loan?
Every person wants a home, may it be an apartment, a mansion or just a simplex. Whether you are refinancing a bond/mortgage or purchasing your little paradise, you sure will need to have a home loan that you is just right for you. There are a lot of financial institutions or lending companies or even banks which offer hassle- less home loan processing.
First time home buyers usually get a home loan more easily. There is a wide variety of programs that have restrictions that come with the contract. Others find this too perfect for them, but for some, this may be a wrong choice.
First time home buyer loan
All first- times can be a big deal. It consumes too much time, effort and money. Some people usually seek the aid of a first time home loan to hurdle the issues with money. The program varies depending on the location but generally, the idea of a first time home loan is to give qualified borrowers the financial assistance.
Some financial institution would offer the home loan in the following way:
- Low to no down payment
- Limit fees
- Defer payments and offer grants
- Subsidize the cost of the interest
These are but a few examples of the benefits first time home buyers may take advantage of but take note that not everything in the list can be made available for you to take advantage of.
Who can take advantage of a home loan?
Anyone can take advantage of a home loan; but first time home owners are good candidates. Some programs usually offer home loans to people who have not owned a home within the last 3 years. Again, programs vary depending on the area so it is good to check if any lending company or institutions offer this in you area.
Are there any restrictions?
Like any other, home loans also have restrictions. Most of home loan programs put a R limit on the property that you are going to purchase. You may not be able to get a home loan for the most expensive property round the town but you will instead be limited to properties that are at the bottom of the pyramid. The idea is to provide margin and benefit to people who are in dire need.
It is not advisable to use the first time home buyer loan for a rent. You are given the opportunity to own a home so grab it. Finally, the house that you are to purchase must also meet some physical requirements.
You may be faced with a few challenges when getting a first time home buyer loan:
- The home may not be the home you want
- You may lose the benefits if you sell your house too soon
- Paying tax for some benefits you received
- Shared home value increase with the program you signed up with
With these restrictions, you will be armed with knowledge when you decide to get a home loan for you family. It is a must for you to find out the ups and downs of something before you even decide of saying yes to it.
Home Loan FAQs
A home is an important asset especially if you have a family. This is where you raise your children, eat, sleep and entertain family and friends. Owning a home is better than renting since you are building up equity. Is a home loan right for you then?
There is no fixed rate that is pegged right now. It also depends on your credit rating and history. Talk to your banker to find out how you can get the best rates.
Available Credit is what you have open but not using. It is like on standby. An example is a credit card with a limit of $1000 and you used up $400. You still have an available credit of $600.
For home loans, you will look into the last two years and try to predict out three years. You then ask the question like do you expect the income to continue?
You take out the gross income (before taxes) and take 45% of it, then you subtract your debt (bills) to find out what your max payment can be.
This is not always the case. Some small home improvement jobs don’t work out the way you want them to and the cost for that goes to waste. If the improvement is just for some simple paint job or a new wallpaper, just save enough money instead of taking on a loan.
There is probably none especially if you have a bad credit history and have filed for bankruptcy.
There is a fixed interest rate and the number of years for the amortization. The loan is big so at first 95% of the payments goes to paying off the interest. The other 5% goes to paying off the principal. As the balance goes down, less goes to paying off of the interest and more into paying off the principal.
The more you pay, the faster the amortization period will be settled. This will make a huge difference in the total payments you will be paying.
Certainly, although you might need to structure the loan slightly differently, like as an investment property or second home.
Do lenders offer loan deferments or modifications to home loans if you are unable to pay for 1 month. ?
Yes, you can apply for loan modification if you are behind on your mortgage payment or just having a hard time paying your monthly amortization.
Loan Modification may lower your interest rate; forgive part of your loan; extend the paying period so you can keep your home. These remedies are designed to make your payments affordable.
There are First Time Home Buyers programs out there. Check with the local lenders to find out.
You can often refinance at local bank with no closing cost home equity loan. That is, provided that you meet standard ratios of debt to income, that you have adequate equity in the home, and that your credit is very good. If you do not meet these qualifications, then you need to go elsewhere for a more traditional home equity loan.
The structure is not uncommon. Most often than not, the buyer has little to put down.
The credit score will be a bit low so the buyer will be hit by a high interest rate.
Watch out for prepayment penalties as that is also common with such a deal when the credit score is average to low.
The best way is to talk to the bank and see if they can still offer you a loan with your credit rating. Most likely, you will get a higher interest rate than normal though.
How you utilize your available credit will affect your credit score. Don’t max out your credit cards and don’t close credit cards after they have been paid.
Always keep your revolving credit at 20-40 percent of the credit limit. The credit bureaus want length of credit card use not just how well you can settle your bills and then close the account. By keeping the accounts open, it will leave you with a revolving credit limit and improve your credit score also.
Unfortunately, the first thing that the bank checks is the credit history. If you are avoiding a credit check because of a bad credit history, this will come out.
There are programs for people with bad credit histories but you just have to deal with the horrendous interest rates. That’s the trade-off though of not minding your credit history.
You must get advice from a professional before deciding on the proper course of action. You must try on rebuilding your credit score.
After seeing what a home loan has to offer, you must have decided on the right course of action. A home means security, stability and a property which accumulates in value over time. You would want to own one wouldn’t you?
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