We didn't get the 100% BOND!

[MrR]

Old thread, i know but this just happened to my wife an I as well. Applied for a 1.3mill bond at the 4 major banks and got this mixed bag of responses.

1. Nedbank - 100% bond prime plus 0.4 over 25 years subject to valuation. Valuation done 2 days later, bond offer declined due to valuation being muuuuch lower than purchase price.

2. FNB (who i bank with) - 95% bond prime plus 1.7 over 20 years.

3. Std bank (who my wife banks with) - 90% bond prime plus 0.9 over 30 years.

4. ABSA - straight system decline.

Now we trying to get the seller to reduce the purchase price, but thats highly unlikely imho, but i would be a fool not to try.

We first time buyers with decent enough salaries to afford a bond of this size, with all credit being paid up (apart from my car).
Must say this has been a very disponding experience and not sure what to do to get 100% bond at the next application.

Did Absa give you a reason for the decline? They are obligated to inform you why you do not qualify for the credit.
Also, those interest rates are pretty high, which indicates that the banks may find you - or the property - a risky investment.

What bond option did you apply for at Standard Bank? They have a product specifically for 1st time homebuyers that covers >100% (transfer fees) and at a maximum interest rate of prime + 1.25%.

Can't say I can relate: I have pre-approval for a loan of R2.8m at prime - 1, at 100% cover. Haven't found a place yet though.

Good for you.

 

[olmeca]

Can't say I can relate: I have pre-approval for a loan of R2.8m at prime - 1, at 100% cover. Haven't found a place yet though.

Just interested on how you have pre-approval when the banks do not give pre-approval's any more and will only offer a loan based on an offer to purchase? We are looking to buy our own home and this is our experience.

 

[Niner]

Old thread, i know but this just happened to my wife an I as well. Applied for a 1.3mill bond at the 4 major banks and got this mixed bag of responses.

1. Nedbank - 100% bond prime plus 0.4 over 25 years subject to valuation. Valuation done 2 days later, bond offer declined due to valuation being muuuuch lower than purchase price.

2. FNB (who i bank with) - 95% bond prime plus 1.7 over 20 years.

3. Std bank (who my wife banks with) - 90% bond prime plus 0.9 over 30 years.

4. ABSA - straight system decline.

Now we trying to get the seller to reduce the purchase price, but thats highly unlikely imho, but i would be a fool not to try.

We first time buyers with decent enough salaries to afford a bond of this size, with all credit being paid up (apart from my car).
Must say this has been a very disponding experience and not sure what to do to get 100% bond at the next application.

I'll agree with Ancalagon - get them to go out to the property. Also, the bank's valuation is dependent on the municipal value - you can get the municipality to come and review the property and "push the value up", but this will lead to higher rates and taxes.

Alternatively, try Ooba or get a bondoriginator.

Lastly, your agent can cut their commission by quite a bit, which can bring the price down - but not 10%, though.

 

[Y'all Qaeda]

Just interested on how you have pre-approval when the banks do not give pre-approval's any more and will only offer a loan based on an offer to purchase? We are looking to buy our own home and this is our experience.

Cause he works for investec - I think. And they probably pre-approve their own staff.

 

[Maverick786]

Maverick - ask Nedbank if the valuation that they did was an offline valuation. Just ask that question.

An offline valuation means that the valuation was done by an agent sitting at his desk, and it must be done within 45 minutes. Offline valuations use sales statistics for the area and the property in question to calculate the expected value of a property. But they are often inaccurate.

I had a similar situation when I applied for a 99% loan. I eventually got FNB to agree to a prime plus 0.25% loan over 20 years.

was definitly not a desktop valuation, actual site visit if i can call it that.

thing is i worked really hard to clear my debt to be able to have enough surplus income to afford the repayments for a bond of 1.2 -1.3mill. just hoping that the seller is willing to reduce the price, else i'll just keep looking, no biggy. just disheartening coz once nedbank came with 100% i thought the other banks would do the same, guess my inexperience got the btter of me there.

thing is now all these credit checks done by the banks.....will it affect my credit score in any way?

 

[Niner]

Just interested on how you have pre-approval when the banks do not give pre-approval's any more and will only offer a loan based on an offer to purchase? We are looking to buy our own home and this is our experience.

It depends on your bank. We had the same thing with Investec - and then found a house!

 

[IzZzy]

Just interested on how you have pre-approval when the banks do not give pre-approval's any more and will only offer a loan based on an offer to purchase? We are looking to buy our own home and this is our experience.

You are correct - the commercial banks don't do this anymore. I approached the Zebra and negotiated a deal - structured it as asset finance rather than a home loan (but the asset is immovable property) to avoid normal rigmarole. Only difference is that I'm purchasing for rental income, not to stay in it.

Cause he works for investec - I think. And they probably pre-approve their own staff.

Nope.

 

[Y'all Qaeda]

You are correct - the commercial banks don't do this anymore. I approached the Zebra and negotiated a deal - structured it as asset finance rather than a home loan (but the asset is immovable property) to avoid normal rigmarole. Only difference is that I'm purchasing for rental income, not to stay in it.



Nope.

Close enough..

 

[R13...]

Can't say I can relate: I have pre-approval for a loan of R2.8m at prime - 1, at 100% cover. Haven't found a place yet though.

Investec or RMB I assume?

Edit: I see it's answered.

 

[hondaboysa]

http://www.iolproperty.co.za/roller/news/entry/mortgage_bond_defaulters_cause_banks this explains a lot!

 

[Other Pineapple Smurf]

Just interested on how you have pre-approval when the banks do not give pre-approval's any more and will only offer a loan based on an offer to purchase? We are looking to buy our own home and this is our experience.

You get two types of pre-approval. The first is an affordability check and holds zero value as its just a pre-qualification test. This is an automated one and is your first pass.

I did mine online with Standard Bank and it immediately said I qualify for R1.4 million based on my then salary (was before a big increase) and current debt.

I then needed to apply for the pre-approval certificate which is valid for 3-12 months depending on the bank, etc. I started the process but Standard Bank are useless. But with this certificate its as good as gold as it shows your good standing with the banks and can only change if you change your credit standing. **

I was lucky in that I bought a very undervalued house and was able to use my pre-qualification check to help the bond originator secure me a better bond. In the end the banks where only prepared to give a max R980K at 90% LTV, a far cry from the original R1.4 million and this was after a 30% salary increase.

In the end I bought a R735K house (valued at R1.1 million) with a 90% bond. If the house was valued less than the selling price, then the bond would have been even lower.

Edit: Standard Bank call this a Pledge and its not the same as pre approved certificate (my dad use to be an estate-agent so I know the difference)

Home loan pledge
Our home loan pledge guarantees the maximum amount that we would lend you to buy a home. The pledge, which is valid for six months from the date of issue, is available subject to our normal credit approval procedures. If your pledge expires before you have made a decision on the property you want to buy, you will have to apply for a new one. We do not charge a fee for issuing a pledge.

How does it benefit me?
It states the loan amount that you qualify for
It is valid for six months, which gives you time to shop for the property you really want
Once you have chosen a property, all that needs to be done before the loan is granted is for us to assess the property you want to buy and verify your income.

 

[Other Pineapple Smurf]

was definitly not a desktop valuation, actual site visit if i can call it that.

thing is i worked really hard to clear my debt to be able to have enough surplus income to afford the repayments for a bond of 1.2 -1.3mill. just hoping that the seller is willing to reduce the price, else i'll just keep looking, no biggy. just disheartening coz once nedbank came with 100% i thought the other banks would do the same, guess my inexperience got the btter of me there.

thing is now all these credit checks done by the banks.....will it affect my credit score in any way?

Thing is can you afford the 1.2 bar when interest rates go up? Can you afford the rates n taxes and insurance.

I will be the first to say I could not and glad I did not attempt to purchase beyond my means. After my online affordability I generated a matrix with price ranges in increment of R50K from R500 - R2 million. I then calculated the bond repayments on rates from 8% to 20%. From that I could what we really could afford when things go south. I then adjusted this table with rates n taxes and saw I had to go for even less. End of day I'm not prepared to loose my house and I would rather live in a cheap area (which I do) than struggle my arse off in an upmarket area.

 

[IzZzy]

I will be the first to say I could not and glad I did not attempt to purchase beyond my means. After my online affordability I generated a matrix with price ranges in increment of R50K from R500 - R2 million. I then calculated the bond repayments on rates from 8% to 20%. From that I could what we really could afford when things go south. I then adjusted this table with rates n taxes and saw I had to go for even less. End of day I'm not prepared to loose my house and I would rather live in a cheap area (which I do) than struggle my arse off in an upmarket area.

Sounds like an incredibly useful tool if you wouldn't mind making publically available?

 

[Other Pineapple Smurf]

Sounds like an incredibly useful tool if you wouldn't mind making publically available?

I've thought of it, perhaps I should just write one and host it on my domain. I found it was a ballache trying to just get a basic online calculator to help me.

Actually, I will make this a quick project tonight and post the link tomorrow morning.

 

[IzZzy]

I've thought of it, perhaps I should just write one and host it on my domain. I found it was a ballache trying to just get a basic online calculator to help me.

Actually, I will make this a quick project tonight and post the link tomorrow morning.

Thanks that would be very appreciated!

 

[Shah33m]

This really is a great thread.

I too am thinking of buying a house soon, perhaps in the next 6 months.

I am looking at a cheaper "starter house" though. I will be a first time buyer.

Are there any "tactics" that could be used to get the price of the house lowered or perhaps the interest rate?

I have been done in with my car deal (paying 15% interest) so would want to avoid this.

Thanks in advance gents.

 

[Other Pineapple Smurf]

This really is a great thread.

I too am thinking of buying a house soon, perhaps in the next 6 months.

I am looking at a cheaper "starter house" though. I will be a first time buyer.

Are there any "tactics" that could be used to get the price of the house lowered or perhaps the interest rate?

I have been done in with my car deal (paying 15% interest) so would want to avoid this.

Thanks in advance gents.

What helped me last year was forums like this. Without them I would still be renting.

The best advice I can offer is don't be afraid to ask questions no matter how dumb or unimportant they may seem.

 

[Ancalagon]

This really is a great thread.

I too am thinking of buying a house soon, perhaps in the next 6 months.

I am looking at a cheaper "starter house" though. I will be a first time buyer.

Are there any "tactics" that could be used to get the price of the house lowered or perhaps the interest rate?

I have been done in with my car deal (paying 15% interest) so would want to avoid this.

Thanks in advance gents.

There are a few things that will influence whether the banks are willing to offer you a loan, and if so, how big that loan will be.

The first, believe it or not, is if you are a customer of the bank you are applying to. Absa and Standard refused to lend me money because I didnt have an account with them. So perhaps it might be worth your while to open a cheap savings account at one other bank, just to give yourself more options. Plus if you are not a customer of the bank, they might be willing to lend you the money, but would require a higher deposit and maybe offer you a higher interest rate.

Do you understand how loan to value (LTV) works? Loan to value is simply the value of the loan compared to the value of the house - its what people mean when they talk about 90% loans. The higher the percentage, the lower the deposit, and the lower the deposit, the higher the risk for the bank. The higher the risk for the bank, the more interest they are going to charge you. Banks charge you higher rates of interest if they are not sure if you can pay the money back. It is to make sure that they have a good chance of making a profit, even if you default on your payments.

Why is a higher loan to value ratio risky to the bank? Lets say you lose your job and can't afford to make payments. So the bank repossesses your house. Now they need to sell it to try to get the money back that they lent to you. The problem is, in an auction like that, they are not likely to get the full amount of money that you paid for the house. So lets say they lent you 90% of the value of the house, but on auction, the house goes for 75% of what you paid. Now the bank has lost a large amount of money because they took a risk on you.

It is possible to get 100% bonds - mine was a 99% bond I think. But you will need a very good credit rating (which I have), and be prepared to pay a higher interest rate. Otherwise, start saving up for a deposit!

 

[Sideshow Bob]

Give ooba a call - I had excellent experience with them, may not get you 100% bond but you are likely to win on interest rate. We got prime -0.75 last year. Also, I would work towards saving for 10% deposit in any case. It will save you lot of interest.

 

[Sideshow Bob]

There are a few things that will influence whether the banks are willing to offer you a loan, and if so, how big that loan will be.
The first, believe it or not, is if you are a customer of the bank you are applying to. Absa and Standard refused to lend me money because I didnt have an account with them.

We got loan was from Standard bank (via ooba) and I did not have any account with them at the time.