Home Loan and Business owners

[voldoverse]

me and the wifey have applied for a homeloan through a bond originator having had to jump through a buttload of hoops because im a business owner.

so the results are starting to trickle in and standard bank is first. they want to offer me 90% of the money stating that the only reason the wont give me 100% is because i have my own business, does anybody know if this is what all the banks and home loan companys will tell me??

must say, im so tired of feeling like a 2nd grade citizen because i own a business. its like everybody treats you as if you are a conman lol

 

[Venomous]

Is this your first home purchase?
How long have you been running your business?


Banks are hesitant to offer 100% to first time buyers. The credit act has a lot to do with that.

 

[voldoverse]

yes this would be our first home loan.

business is a pty ltd running 4 years now and doubling profit every year, so no dodgy setup, just a good thriving classic business model.

i can understand what you are saying about being cautious with first time buyers but what ticked me off is the fact that they said i cant get 100 because of the fact that i own a business.

so now im just wondering if i must expect my business owner status to put me at the same disadvantage with all the rest also or is this a standard bank only thing

 

[rietrot]

Most banks don't give 100%. Especially on more expensive homes above ~R600k.

They see running your own business as more of a risk. Compared to someone who has a set income from a salary.

 

[raeesdawood]

Do u have a life policy in place?
Usually if u do you get a 100%

 

[SYNERGY]

Pay yourself a salary from the business.
Don't mention that you own the business.

 

[Grubscrew]

Wow a 90% bond for a self employed person, generally if a self employed person gets an offer from a bank it ranges between 50-80%.

 

[SauRoNZA]

Most banks don't give 100%. Especially on more expensive homes above ~R600k.

.

I know of plenty of 100% first time buys well beyond the 600k mark.

So I don't think "most banks" is very accurate at all.

 

[Adenoid Hynkel]

Pay yourself a salary from the business.
Don't mention that you own the business.

This

 

[voldoverse]

so far only standard banks offer stands, absa just says no, nedbank said they have no interest to finance a house for someone self employed and im still waiting on fnb and sa homeloans response

 

[rodga]

so far only standard banks offer stands, absa just says no, nedbank said they have no interest to finance a house for someone self employed and im still waiting on fnb and sa homeloans response

Very strange. Self employed and nedbank offered me the best rate between Standard, sahl and mercantile bank. This was in Feb.

 

[Greg C]

so far only standard banks offer stands, absa just says no, nedbank said they have no interest to finance a house for someone self employed and im still waiting on fnb and sa homeloans response

I find it terribly interesting all the different comments. So as mentioned previously in other posts I dealt with credit, scores, bonds etc. I work for a bank.

Lets just start with how you did the application and what you submitted

1) Did you submit an ITA34 tax assessment as you are self employed?
2) Did your ITA34 tax assessment actually reflect income or from a tax perspective?
3) When providing bank statements was the income regular in that the same amount was being deposited into your account or was it fluctuating depending on how much you took out at the time?
4) The house you are purchasing - Where is it? AS I have described before, 100% bonds are not necessarily to do with the individual but alot to do with the property. Property valuations the bank have through our panel of valuators, come back with different matrix of ratings. Only A+ properties in specific areas we feel are priced to what they are worth, and believe are less risky etc will we provide 100% finance against.
5) Further to the above comment, if your income fluctuates it can be a little more difficult NOT because the bank doesnt do 100% finance But because the person you are dealing with is A - not fighting for you or B) doesnt understand how your income is derived when he/she needs to explain to credit (me)
6) WE do not really like to give 100% bonds because - Why should the bank take all the risk on the property? If you want the house shouldnt a deposit and some form of goodwill generally be put in.
7) Yes first time buyers are given preference but I again refer to the comment - Why do you expect the bank to take full risk on the property.

Either way the reasons for different banks are from different front line staff. They are not the reasons for the actual answer of 100% as per above

 

[Greg C]

Very strange. Self employed and nedbank offered me the best rate between Standard, sahl and mercantile bank. This was in Feb.

Different banks have different portfolio and treasury policies at any given stage- Ie we balance our portfolio based on exposures to different markets. Most banks wont do building loans and or stand purchases alone without being 1) described as a wealth individual with 1.5 million Gross per annum per year because it is cash flow heavy and 2) because people buy land AND DONT BUILD ON IT. Land is very difficult to on sell.

Further , as mentioned banks have different policies and objectives set. Nedbank will always say no, Ned bank has the biggest property portfolio in Southern Africa (Fact) in terms of residential homes. Overly so, hence why you get great rates on deposits to counter balance the issue of capital Basel 2 requirements.

SBSA need property, as they are currently under weighted. WIll be more risky on land and buildings. FNB well if you are an existing client they generally never say no. SA homeloans is nothing more than a broker really (In my opinion). Not a bad place for a good rate. Lastly ABSA are also quite big on doing agri business (ie farms etc) and like mostly to do with their own clients. Its just an historical thing - we took preference on existing clients since volkskus etc

Either way as per my above and policies for credit appetite have influence, together with the understanding of the frontline staff you deal with to fight and explain your case to credit. Most times they dont care.

 

[Pakka]

So Greg, do you reckon its easier to have an originator get deals for you, or work directly with the frontline staff of each bank?

I've used originators twice before, but don't feel like they dealt properly with some of the banks and decided that next time I'm applying myself at each bank.

 

[rodga]

So Greg, do you reckon its easier to have an originator get deals for you, or work directly with the frontline staff of each bank?

I've used originators twice before, but don't feel like they dealt properly with some of the banks and decided that next time I'm applying myself at each bank.

I had better results doing it myself. The originator refused to go back to the banks to get a better rate.

 

[Other Pineapple Smurf]

@OP take it.

As mentioned 90% is unheard of. When we bought four years ago we got a smaller bond together as wife is self-employed than what I go applying by myself with the same income.

 

[Other Pineapple Smurf]

I had better results doing it myself. The originator refused to go back to the banks to get a better rate.

I used a professional originator who has a lot of recommendations from friends. If it where not for her, I would never have been able to buy my house. She fought for a better rate and got it for me.

I also know of a lot of people that had the reverse experience with other originators.

 

[Greg C]

I used a professional originator who has a lot of recommendations from friends. If it where not for her, I would never have been able to buy my house. She fought for a better rate and got it for me.

I also know of a lot of people that had the reverse experience with other originators.

Spot on. Again there are so many variables to consider. If it was me applying for a bond I would start with my bank, then move to my alternative and then to bond originators (they can be so good and so terrible).

 

[Jehosefat]

Ned bank has the biggest property portfolio in Southern Africa (Fact) in terms of residential homes. Overly so, hence why you get great rates on deposits to counter balance the issue of capital Basel 2 requirements.

That is not even close to being true. Based on audited disclosures for December 2016, ABSA has R268bn of Resi Mortgages, Standard Bank has R339bn of Resi Mortgages, don't know what FNB has and the Nedbank is bringing up the rear with only R119bn of Resi Mortgages.

Nedbank probably have the biggest Commercial Property book but they definitely do not have the biggest Resi book.

 

[Greg C]

That is not even close to being true. Based on audited disclosures for December 2016, ABSA has R268bn of Resi Mortgages, Standard Bank has R339bn of Resi Mortgages, don't know what FNB has and the Nedbank is bringing up the rear with only R119bn of Resi Mortgages.

Nedbank probably have the biggest Commercial Property book but they definitely do not have the biggest Resi book.

Not what we get told, nor when we do discussions with partnership and JV agreements. But hey