Category Archives: Bond originators

Information, articles and news that is relevant to bond originators ins South Africa.

Transfer duty threshold too low.

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Buying a property these days is costly enough without having to pay all those extras like transfer duty. South African bond origination firm Ooba has indicated that finance Minister Trevor Manuel should increase the threshold of when transfer duty is paid.

It was already increased in 2006 from R190 000 to R500 000, and now three years on it looks as though it may be necessary again to allow first time buyers to enter the market.

Transfer duty is the tax a buyer pays when purchasing a home. The money is paid to the government, not the seller of the property. Currently if the property costs less than R500 000 there is no transfer duty/tax payable on it. Transfer duty is often in the tens of thousands of rands and can seriously affect a buyers options. They may be able to afford the bond on a home of R800 000 but when the transfer duty is added on it may put that property into an unattainable category.

Transfer duty is 5% on transactions between R500 000 and R1000 000. Anything above R1000 000 has a flat rate of R25 000 and then 8% of the balance over R1000 000. So for example a house costing R800 000 has a transfer duty of R40 000, making the total R840 000. Quite a big difference.

With the difficulty of getting a bond these days, due to affordability and stricter lending regulations all buyers would welcome a change to make things more affordable. You can find basic transfer duty calculators online, but always confirm how much you will be paying with a professional before you sign anything.

What do you think, will changing the transfer duty threshold stimulate the property market a bit more?

Why would I want to use a bond originator?

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We all know how time consuming it can be to apply for a home loan, so we look for ways to speed up the process. One way of doing that is to utilise the services of a bond originator. Why would you want to do that?

Well the first thing they should be able to do is to make the application process alot smoother for you. If you a use a bond originator only one application form needs to be completed that will be submitted to the various banks and lending institutions.

They should allow you to provide them with all the necessary information and documentation and then they themselves will setup your applications for the various banks and lending institutions so that you don’t have to.

Because they should have a relationship with the banks they will usually be able to negotiate better rates on your behalf. This will certainly save you money in the long run.

Most importantly their service is totally FREE as the banks pay them for the business they receive.

Always look for a reputable originator, if people recommend them to each other you can then hear about the service they received and whether or not they were happy with it.

What is going to happen to my house?

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There are many people out there that will lose their house this year, I know it’s sad, but it is going to happen. Now is the time to plan your strategy to try everything you can to prevent this from happening to you.

Some things you can do:

Please ALWAYS consult a financial advisor before doing anything where your financial planning is concerned.

Ask the bank for a rates concession. Even if they only agree to a small concession it will save you money and have a major financial impact on your life. If you take the extra cash you save and repay it into your bond you could pay your mortgage off quicker.

Your credit profile is one of the tools a lender uses to determine your credit risk, the better your profile the better your chance of getting a rates concession and this could vary between 0.5% and 1.5%. If you have been paying your house diligently for the last few years you can approach your lender/bank to negotiate an interest rate concession.

Refinance your house to cover you over this period. If you go to a decent mortgage originator they could provide you with the advice you need. They will be able to go to the banks and get different options, which could work out cheaper. Maybe you move your home loan to a new bank and get a better interest rate. If you do consider doing this remember that it is risky, all increased debt on your house is risky, but it could just provide you with the buffer you need to get back on your feet.

If you have any “dead money” (savings etc.) move it into your home loan account, even if it is just temporarily. Your interest rate is worked out on a daily basis and by moving all your unused money to your loan could save you money, and potentially save your house. As long as the money is in your loan account your loan will be smaller. The smaller your loan, the more you save on the interest.

I hope some of these can help you out if you need a plan. If anyone else out there have any other suggestions please let us ALL know, after all that is why we started Yes2Property, to help each other.

100% bonds a thing of the past.

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Nedbank announced on Wednesday they would follow the example of other banks and put an end to 100% home loans.Borrowers were always able to get 100% loans up till R300 000,as of Wednesday these loans will now require a 5% deposit.

The bank had to readjust it’s lending policies due to increasing financial pressure that has affected other banks.Many people will be left wondering when they will ever be able to afford a home of their own.It doesn’t look good at the moment and we are all waiting to see what will happen with interest rate.

Will it go down in December or only next year in April.Most economists are predicting a drop early next year but some are saying things in the global economy are moving too fast for that and are predicting a December drop.

The interest rate drop will bring about a recovery in the residential property market and just make repayments more affordable.With the National Credit Act already making it tougher to get a home loan the instigation of deposits for all home loans won’t improve peoples chances of getting a home loan at the moment.

It leaves one wondering whether or not they may bring back 100% bonds when things improve for us again.Maybe by that time our credit histories will also have improved because of the restrictions imposed by the NCA.

Well, the poor sellers out there are probably not at all happy with the current rate of bond approvals and it looks like they may still have to wait a while before they have the upper hand to negotiate for their best interests.

I hope we can all look to future and know that it’s probably going to get a lot better before the middle of next year.