How in hell are people buying houses?

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Uraeus

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I have recently put in an offer to purchase on a place I am interested in buying,
and my experience thus far in getting a home loan is simply ridiculous.
I dont have a long history of buying cars etc, so it is proving a headache.

I have approached all the banks, as well as sahomeloans, and it is apparent there
is a squeeze out there with lending. All institutions gave 90% approval, except for ABSA which refused to consider my application outright.

According to my salary alone I can purchase a house for well over the purchase price,
but the institutions want me to take another loan to cover any deposits needed.

Their reasoning is that I am a credit risk.. OMG, changing insurance makes you a credit risk? When you change insurance, logically you phone around to get best quotes, and along with this comes 'enquiries' to your credit record. Please someone explain why this is a bad thing, when coming to actually apply for credit.

I am wondering how many people out there have needed to finance deposits/banking fees with a loan. In my case I have enough funds to cover the costs of buying a house, i.e. all the banking fees, transfer etc, but have insufficient funds for 10%, which in my case is around R100k.

How are people meant to save 10% deposits when they are paying rent etc?
:confused:

/end rant
 
Run up a large credit card.

Then when they give you your loan because you are badly in debt pay off the CC. Odd that you need to be badly debt ridden to get more debt :D.

Such is the system i guess.
 
killadoob said:
Run up a large credit card.

Then when they give you your loan because you are badly in debt pay off the CC. Odd that you need to be badly debt ridden to get more debt :D.

Such is the system i guess.
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But it is such a catch 22, i.e. You want credit, so you goto the Bank and they say: "Got credit?"
Then we they 'look you up' they realise, yay, you've been paying accounts (insurance, phone, etc) regularly,
but nay we cant give you credit. Its like you need to incrementally get in debt, to later get yourself into higher debt.

It is rediculous. My point of view. Give me a loan, If i dont pay, you take it back and/or destroy my name in the process.. How is that not enough
'insurance' for the bank that i'l pay the debt. (cry)
 
We were lucky enough tp purchase recently, no one would grant us a loan except for our own bank, we only had 2% deposit they insisted on 10% we went through OOBA and they managed to talk them down to 5%. (FNB by the way) We were also lucky enought to get the other 3% of the deposit through a interest free loan payable back in 6 months from a friend. Its not easy and the best advice I can give is if youre staying with a wife or fiance, try to save one salary and live on the other, also be ready for costs cause there is alot of them...... (60k dep and +-60k expenses)
 
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I think the problem boils down to those companies that run a credit check, they do it more than once & it reduces your credit score & the stupid banks see you as a credit risk because you "shop around " too much for credit!
 
i am also in the same boat made an offer to purchase , my bank gave me an 80 % bnd , then ABSA gave a 90 % . i am thinking i might just buy a 1500 rand shack and move to katlehong because all these banks aree just plain crazy
 
Chief Whip said:
I think the problem boils down to those companies that run a credit check, they do it more than once & it reduces your credit score & the stupid banks see you as a credit risk because you "shop around " too much for credit!
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Credit checks don't affect your credit record. It only appears, but you can't be penalised for it.

I'm not sure how you guys are struggling because I was offered a 100% bond with only a cellphone contract, vehicle repayments and a Truworths account. This was a year ago. Still saved up 10% for the deposit though.
 
Remember the loan on the property is also dependant on the area the property is in, and how many other properties the bank has there.
They calculate risk on this as well (IE they dont want to be over extended in certain areas etc). You might find if you apply for the same amount loan somewhere else, you will get different rates and loan amounts.

If you are a first time buyer, you should have been able to get a 90 - 100% loan without too much hitch if your credit rating is decent.
Considering the current situation, a 5% - 10% deposit, whilst a lot, seems fair for a bank to ask IMO.

Also remember, interest rates are going to go up towards end of the year (expect 1% possibly 2). Add this into your payments now, because each % is a fair whack of money.
 
Mike Hoxbig said:
Credit checks don't affect your credit record. It only appears, but you can't be penalised for it.

I'm not sure how you guys are struggling because I was offered a 100% bond with only a cellphone contract, vehicle repayments and a Truworths account. This was a year ago. Still saved up 10% for the deposit though.
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Yup, i just had a cellphone contract and a car repayment. Got the bond at 100% with a semi decent interest rate (for first time buyer)
 
managed to buy a place after getting 95% bond.ALL my savings (and more) went to the costs.later i found that if i banked at standard bank they give out 110% loans to first home buyers!probably the only good thing they are good for...but yeah..not easy to buy places these days.i envy all the pre NCA/depression house buyers :(
 
I am talking a bit out of date as I purchased my first property a good couple of years ago so not sure if the laws etc are still the same but banks were not allowed to give a 100% bond to people buying exisiting properties but if you purchased off plan you could get the full 100% (I think it had something to do with the evaluation of the property increases as soon as the first brick is laid and so guarantees the bank of getting its full money back if you forfeit). We purchased a property off plan and then sold it 3 years later for a good profit that allowed us to pay of that existing property as well as put down a deposit on a new house. I am not sure if this is still the case though.
 
What you will probably find is that the house was slightly overpriced for the area.
Also they "do" a projected budget for you with food, petrol etc and then see if "you" can "afford" the bond repayment.

I know when I sold and bought a new place they "mistakenly" had 2 bonds on this calculation and had some wierd and wonderful figures in my "budget" lol

Also have a look at the house insurance ( building ) they say you need to take. I bought for R1.3mil and they put a replacement value of R2.5mil on the place. Not a chance in hell I could sell for R2.5mil.
 
Rather carry on renting and put the difference between what you would pay for a bond and what you would pay for rent (usually quite a substantial amount) into a share portfolio or your retirement annuity.
 
poorestguy said:
managed to buy a place after getting 95% bond.ALL my savings (and more) went to the costs.later i found that if i banked at standard bank they give out 110% loans to first home buyers!probably the only good thing they are good for...but yeah..not easy to buy places these days.i envy all the pre NCA/depression house buyers :(
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They only give 110% under very strict circumstances hey and if the property is under a certain value.
 
Thanks for the feedback guys/gals. Of the 90% approvals the banks are hitting me with a 12.5% interest rate, and in my opinion that is an arm and a leg. Once again, HTF do people afford this. I shouldnt be crying, Im glad I never bought when it was over 20%!
 
Uraeus said:
Thanks for the feedback guys/gals. Of the 90% approvals the banks are hitting me with a 12.5% interest rate, and in my opinion that is an arm and a leg. Once again, HTF do people afford this. I shouldnt be crying, Im glad I never bought when it was over 20%!
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Thats prime + 3.5% on a house...ridiculous!!! Have you checked your credit record? something seriously wrong there.

would never consider prime + on any fixed property purchase myself. expect prime -1 at least.
 
etwylite said:
Thats prime + 3.5% on a house...ridiculous!!! Have you checked your credit record? something seriously wrong there.

would never consider prime + on any fixed property purchase myself. expect prime -1 at least.
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This is what I cant understand, they say my credit record is bad because there are alot of enquiries, majority from insurance brokers etc when I went fishing for better quotes. If prime goes to 10-11% that is like 14.5% by next year. Arm and many legs.
Surely by buying a house your credit record can only get better? i.e. If you pay etc, keep all accounts in check, surely can get interest rate cut down from +3.5% to something better, even if it is like 6 months down the line?
 
You are entitled to 1 free credit report from each credit bureau annually.

I suggest you get a copy from Transunion and Experian and deal with whats on there before applying for a bond again. Related Enquiries do not affect your credit score so something else is amiss.

That 3.5% interest rate differential will cost you over R160 000 over the bond term so rather sort it out now.
 
etwylite said:
You are entitled to 1 free credit report from each credit bureau annually.

I suggest you get a copy from Transunion and Experian and deal with whats on there before applying for a bond again. Related Enquiries do not affect your credit score so something else is amiss.

That 3.5% interest rate differential will cost you over R160 000 over the bond term so rather sort it out now.
Click to expand...

I've been getting credit checks about twice annually through credithealth, they get all three, Transunion, Experian etc.
I got one last month.

The only troublesome thing that I can find is, there are alot of enquiries, no late payments etc. That is the only factor that the bank said it is so high. The guy at the bank said every time someone looks at your account
you loose a 'point', so it looks worse for other people looking at your credit. I have been working for 3 years, do I need to have been working for longer to get better credit? Not logical.
 
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