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What is a Bond Originator?

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A bond originator can prevent nightmares when buying your dream home.  We have the tools to secure the best financing terms possible for you and the answers to all of your questions. Throughout South Africa, our Homeloan Junction consultants know their way around the business of home buying. Simplify the multifaceted process of home buying with a single contact to deal with the whole lending process.

What can a bond originator do for me?

When you consider the many benefits of a bond originator, you will be glad to have one working on your behalf.  Your estate agent works on your behalf to find and negotiate a purchase contract for your new home; we at Homeloan Junction can take care of finding the finance … and much more!

Homeloan Junction offers services to you both before you find your new home and after signing an agreement to purchase. Before you even begin shopping for your new home, use the calculators on our website. They make it easy to calculate how much house you can afford and what your monthly payment will be. You can then direct your estate agent to show homes to you that are within your price range. Prequalifying yourself avoids wasted time and disappointment.

9 Good reasons to choose a bond originator?

Are you ready to apply for home financing? The benefits of using a bond originator are many.

  • At Homeloan Junction, our advice is free. You pay nothing for our expertise
  • Your bond originator will walk you through the application.
  • Homeloan Junction has built up a relationship with the banks. Your bond originator  will know who has the best deals at any given time.
  • Your bond originator will submit your application to nine different banks,  one of which will have your best deal.
  • Your bond originator will negotiate with the banks on your behalf to secure the best interest rate possible.
  • Your bond originator does all the paperwork for you and explains the benefits of each offer.
  • You could prepare and submit an application to multiple banks yourself. However, an experienced bond originator will likely find you a better deal than you can negotiate yourself.  It will also save you time and aggravation. Remember, this is a free service.
  • Homeloan Junction has an impressive approval rate for home loans.
  • Your bond originator will work with your estate agent to make sure all agreed to terms are met in a timely manner.

Do you need these home loan services?

Bridging Loans: This short-term loan bridges a time gap. Your contract to buy calls for funds on a specific date. Your funds may not be available until 90 days after that date. What do you do?
Bridging Loans will prevent a delay, allowing you to uphold the terms of the contract. Bridging loans are the solution for those buyers unable to coordinate the purchase of a new home with the sale of their old one.

Home Improvement Loans: Home improvement loans are secondary home loans. Use one to remodel a kitchen, add a pool or an extra bathroom. They are also a lifesaver when homeowners need expensive emergency repairs. The payments are usually small and extended for several years.

Personal Loans: Personal loans are smaller than major home improvement loans. You can secure these flexible loans quickly and often over the telephone. This kind of loan will allow for quick completion of your new home décor. Maybe you need a new bedroom set complete with a memory foam mattress. Sometimes furniture and curtains from the old house do not work in a new one. The payoff term of a personal loan will be between 15 and 60 months but you can always pay it off early.

Investment Property Loans: Buy a house to let as an investment for your future. American billionaire Warren Buffet recommends investing other people’s money to gain the greatest return. You borrow the money to buy an investment property and the lessee pays back the loan in rent to you.

In twenty years, you have a valuable asset free and clear. You can sell the investment property or borrow against it. Use the funds to pay for university educations, weddings or early retirement.

Homeloan Junction is your point of contact for complete home loan services. Our experienced bond originator are sure to find the best rates and terms to fit your financial needs.

Where to Buy an Apartment

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Looking to make an investment in a property? Homeloan Junction can assist you with a buy-to-let home loan. We are available online and our website has calculators and information to help you make a decision.

There could be a number of reasons to be thinking along these lines:

  • the kids will soon need accommodation while attending Varsity – so buy now and rent it out while they get on with passing matric;

  • perhaps granny needs to move into an apartment but needs time to get around to accepting the fact – buy now and rent it out until she gets used to the idea;

  • maybe looking to provide extra rental income each month for when you retire is the way to go.  By using a buy-to-let home loan and allowing the rental to pay for the apartment you will eventually have a steady income when the mortgage is paid off.

What’s A Buy-to-Let Home Loan?

It is exactly what it says it is! It is a home loan to enable you to purchase a property with the intention of leasing it out, and not to live in it at that time. It is a long-term investment with eventual benefits. It can provide additional income for retirement or be used to finance your children’s further education by having an asset against which to raise finance.

What?  Where? When?

1. What: As seen elsewhere in the world, the property market has seen ups and downs but as a long- term investment, property is a sound choice. Good returns have been experienced by the rental market in South Africa. Smaller homes in the middle to lower price range are soughtafter as rental properties. This pinpoints those who are not yet able to afford their own property. Sectional title, flats and apartments are exceptionally popular and always in demand – especially smaller apartments in the bigger cities.

2.Where: If you intend buying an apartment to eventually live in, or for the children when they attend University, the choice of where to buy is narrowed down. When purchasing an apartment to rent out, it would be best to consider an area with has a high requirement for rentals which will see it fully rented out. As mentioned, the bigger cities project the biggest demand and enjoy the higher rentals.

The northern areas of Johannesburg are the most popular neighbourhoods to look at when wanting to apply for a buy-to-let home loan to purchase an apartment. Areas to consider are Parkhurst, Parktown, Parkview, Hyde Park, Houghton, Melrose, Sandhurst, Saxonwold, Illovo, Inanda and Dunkeld. Students always require accommodation so other areas to consider are in reasonable proximity to the Universities.

Cape Town is always popular with tourists and its wonderful beaches, mountains, wine estates and upmarket residential areas are appealing. You can’t go wrong when buying in one of the following Cape Town neighbourhoods: Bantry Bay, Bakoven, Fresnaye, Green Point, Mouille Point, Camps Bay or Clifton. City Bowl is also a sought after area and growing in popularity. The cosmopolitan lifestyle enjoyed in Cape Town is a huge draw card to one of the most constant property markets.

3.When: The sooner the better! There is no time like the present. Remember, we said it is a long-term project and investment so best get started now.

Check List

Here’s a checklist of things to bear in mind when you buy that apartment:

Tax

It would be practical to consult with your accountant as to what the tax implications could be with the acquisition of a new property. They will advise you at which rate you will be taxed with the rental considered as additional income; what to expect in view of capital gains tax and if there are any tax deductions that could be applied.

Savings

The less you borrow as a buy-to-let home loan, the greater your eventual profit will be.

Comprehensive investigation into your investment is a must to ensure you make an informed decision based on sound advice. This is where your estate agent and bond originator can be invaluable. Do you require a deposit? What is the interest rate expected to be? Is the neighbourhood safe and settled? Knowing the average rental in the area will indicate what you could expect as a return.

Quality

Choose a property that is in relatively good condition as you do not need to pay for extensive repairs. Cosmetic improvements, such as repainting and garden improvements, is always a worthwhile exercise.

Terms

Weigh up the advantages of a loan over a shorter term with a higher monthly payment, opposed to a lesser amount over a longer period of time. Inquire if the loan can be repaid sooner than the agreed period, and if so, what penalties will be incurred.

Our home loan expert will be happy to guide you through your application for your buy-to let homeloan. This service is provided free of charge and will save you time and stress allowing you more time to dwell on becoming the proud new owner of an apartment. Get in Touch with us for more details

Homeloans and home ownership always remains interesting.

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We return to buy-to-let.

Here are some solid thoughts for those of you privileged enough to afford a property investment.

  1. Remember to buy close to home. Think of it this way: Trouble equals distance squared. Ever tried to find a plumber to fix a geyser in another town. ever tried to sort out a non-paying tenant in Durban when you live in Johannesburg? One of the benefits of investing in property is that you can “touch and feel” the investment; be close enough to do so simply.
  2. Avoid maintenance as far as possible. That beautiful lawn, the sparkling pool, both can become nightmares in the careless attitude of a tenant. Similarly, look for a property where painting on the outside is kept to a minimum. There are many lovely complexes that are built with face bricks and only gutters, window frames and doors to be painted. Linked to this thought is the question of high rise buildings. A lift replacement in the retirement village in Hermanus has just cost R2.5m for only one floor and the Body Corporate has been saving for 3 years to do it. what you can see immediately is that it has come at the cost of painting and other maintenance. So try to avoid buildings with lifts in favour of stairs.
  3. Remember to retain a kitty for unexpected repairs. Stuff happens and your tenant will not appreciate a slow deterioration of carpets and fittings as you annually increase the rent. Prepare for some push-back and ongoing renovation. You also don’t want to lose on resale because your property is old and tatty.
  4. Secure your tenant contractually. I have just has reason to negotiate a Rental agreement. Rawsons have an excellent offering and the agent was highly experienced in his field – something it is always good to enquire about. However, Just Letting have Rentsecure for almost the same monthly fee. This policy enables your rent, less the 8% fee in total, to be guaranteed every month. If the tenant hasn’t paid, Rentsecure ensures the collection process until the tenant is up to date and will even initiate eviction processes if required. That’s cool to have when needed – collections and evictions can be expensive and time-consuming. Contract with your tenant without exception. a handshake is very difficult to manage legally if and when required. Furthermore, details around behaviour, alterations, pets etc are left in the air if you cannot prove what is considered acceptable. Finally, contracting collections and inspections by a reputable letting agent may look expensive but is well worth the while when required.
  5. Pay off the bond as quickly as possible and make sure it is an access facility. The purpose of having an investment property is to provide an asset to invest further. Just because the bond is being paid by the tenant is not a reason not to pay it off quicker as you are able. once you have the bond reduced or paid off, use it to invest again in whatever you choose. This does two things, a. It enables you to take risks using a non-primary property as collateral so in the event the business does not go well, you don’t lose your family home, and b. The ability to access your bond gives you the chance to take advantage of investment opportunities that arise in a number of markets, for some, even the stock market.
  6. Pick your spot wisely. Close to the Gautrain is popular and tenants will always be plentiful. On the other hand, close to schools and amenities will be popular for young families who often become good tenants. To the later point, a good tenant does not always pay the highest rental – I will often reduce a rental for a longer term or decrease a contracted increase percentage in appreciation of a tenant who looks after my property as their own and always pays on time. Often new property investors struggle with the thought of vacancies and to them I would say: There is always a tenant, there may not always be a high rental. Pretty cheesy if you have to earn a certain amount of rent to pay the bond but then maybe you should have waited and saved a bigger deposit before buying your investment property.
  7. Check out the returns: the following calculations are contentious but when I calculate my return on a property, I use the total cost as the base. See the following example:

Total cost: R645000

Rental per month net of services and levy: R6000

Return per annum: 11.2% [72000/645000*100]

By the way, this is a good return and you could expect less, say, 6-8% net. For this reason it is important to buy where you can expect a sustained capital growth.

Some would say that if I put down only a R100000 deposit and the bank financed the rest, then I could calculate my return as 72% [72000/100000] but I think this is nonsense particularly as the period of the bond increases and repayment occurs on the capital – you obviously use the net rent to do this so how can the return be so high. One thing is for sure in property investment – you don’t need to pay cash and can “gear” your investment with a smaller deposit relative to your bond size.

I’ve said it many times, an investment property or two prove a good long-term asset and give you financial choice when needed.

Buy-to-Let Home Loans

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Buy-to-let home loans are the smart way for South Africans to invest for their future. Buy an investment property while your children are young and when their college-time for comes around, you can borrow against the investment property to help finance their education. When the home loan is fully paid up, you will not only have a property but also additional income every month.

The way to make money on a house is to buy it and keep it for a long time.  It is a lucrative way to supplement your retirement income. Because:

● someone else’s money is helping to buy your investment property;

● when the loan is paid off, the property and the growth value is yours;

● a property can be used as a tax deduction;

● besides the maintenance, it is a relatively unencumbered investment with excellent growth over time.

Getting a Buy-to-Let Home Loan

A successful buy-to-let investment begins with thorough investigation into buy-to-let home loans. If you do your homework and seek the support and advice of an experienced estate agent or bond originator, you will likely do well.

The less it costs you to borrow the investment money the greater your profit will eventually be. The way your taxes are structured will play a role in your margin of profit. Consult with your tax accountant before making any final decisions.

Begin By Researching On Your Own

A buy-to-let home loan is an investment strategy that is growing in popularity with South Africans. If you think property sounds like a promising investment for you search for a buy-to-let home loan lender on the Internet. There are calculators you can use to find answers to preliminary questions.

Questions such as: how much you can afford to invest in a rental property; is a down payment required; what the interest rate will be; the term over which the loan will run; if the loan can be repaid over a shorter period without incurring penalties.

Study the Real Estate Market

There is certain criteria to look for in an ideal real estate investment property. If you look at small to medium sized single-family homes, use this checklist:

  1. The house should be in good condition. It is okay to refresh the paintwork and the landscaping but you do not want to spend money on expensive refurbishments to a rundown house.
  2. The wise choice of house is not the most expensive on the street. The least expensive would be preferable because you will realise increased value if the nearby properties are expensive.
  3. Check the selling history of the neighbourhood. Have prices gone up or down over the last ten years? You want to see a steady increase.
  4. Your investment property will be attractive to many tenants if it is near schools, parks, a shopping centre and public transport. A stable and safe neighbourhood is a priority.
  5. Check the average rental of homes in the area to help determine the possible monthly return on your investment.

It is advisable to view and research several different areas. A real estate agent would likely be helpful in your investigation and save you some time. This is especially true if you decide to invest in commercial property instead of residential. Comparisons will require extensive investigation.

How do Your Numbers Compare?

When you pre-qualify yourself for a buy-to-let home loan, you find out how much you can afford to borrow for an investment property. You will also discover how much the loan repayments will be every month. These will differ according to the interest rates and loan term.

You will need to juggle the advantages of larger repayments over a shorter period – resulting in an overall eventual saving – opposed to a lower affordable monthly repayment over a longer period.

Part of the equation will be whether you can expect to receive a rental to offset the monthly buy-to-let home loan payment.

This exercise will tell you whether an investment property is the right decision for you at this time.

The Right Decision for You?

In South Africa, the buy-to-let loan market is at an all-time high. Rent with capital growth has become a favoured choice for additional retirement income since the returns on traditional annuities and endowments have proved inadequate for retirees to live comfortably.  It is somehow reassuring to be able to drive by, look at and or even touch your investment.

Property is as valid as any other investment asset. Over the last few years property asset investments have outperformed many other assets investments. Banks are well prepared to help investors with the purchase of buy-to-let residential and commercial properties. Would this be an investment choice for you?

Yours in Property,

Vincent

Is your tenant an illegal occupant?

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There’s a thorny issue in renting and that is when your tenant is an illegal occupant of your apartment.

Let’s consider the issue in this blog.

If a rental contract is breached by a tenant and, after receiving notice, he does not undertake the necessary rectifying actions in the specified time, then the landlord may cancel the contract. The tenant is then considered an illegal occupant.

If the occupant refuses to perform his duties in terms of the rental agreement, then he will be found to be in breach of his contract. As an example, the tenant refuses to pay his rent on time. The landlord must inform the tenant in writing that he has decided to cancel the rental agreement so that the tenant, within a reasonable time or a time agreed between the parties, can vacate the premises.

If the tenant chooses to ignore the cancellation notice, and continues to occupy the premises, he will be seen as an illegal occupant. The same principle applies when the tenant continues to occupy the premises after the termination of the rental agreement. An illegal occupant may be evicted from the premises by the landlord. This process will occur in a magistrate or high court so the services of an attorney will need to be retained.

There is no longer a common law right to evict a tenant. All landlords and tenants have to follow the processes and procedures of the PIE Act [Prevention of Illegal Evictions Act, 19 of 1998]. According to PIE, before an eviction may occur, the tenant must be informed about the pending action against him. At least 14 days’ notice must be given of the trial and its date and location. This notice must also be sent to the respective municipality.

On the date of the hearing, the court will consider various factors, such as, if the tenant is an illegal occupier, if the landlord has reasonable cause for eviction and the question of alternate accommodation will be considered. All of these factors will be considered before the court makes a decision to issue an eviction order or not. It is currently a criminal act to evict a tenant without a court order. In turn, constructive eviction, such as disconnecting the electricity or water, is also illegal and considered a criminal act.

The type of action or application that a legal advisor will propose will depend on the facts and circumstances of the case. These actions or applications will be heard in the magistrate or high court. If the legal process is successful, the eviction notice will be issued after which the landlord may proceed to evict the tenant.

There are certain clauses that must always be in a rental contract in order to protect both parties against lack of payment or breach. These clauses include: time limits, court jurisdiction and responsibility for costs if the parties decide to go to court.

The PIE Act clearly sets out the steps and procedures that should be followed to obtain an eviction order. Various definitions and interpretations of other terms are set out and clarified as they apply to the landlord and the tenant. These should be clearly documented in the rental agreement that the parties sign.

The moral of the story is simple: If you wish to protect your investment in the face of an errant tenant, you need to obtain professional help early in the process. The PIE Act is not against landlords but it certainly does protect the rights of tenants; but not without holding them accountable for proven, unacceptable breaches of a well-compiled rental contract.

Yours in Property.

The South African housing market has been somewhat buoyant. The question is: Will it remain so

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Expectations are that the SARB will leave interest rates unchanged at the MPC meeting on 26th March. This expectation follows on the heel of Governor Yelland’s indication that the United States Federal Reserve will not be raising interest rates soon in that country as inflation is very low ( less than 1%), and meaningful job recovery is still sought in the US economy. This news will no doubt help retain our trend.

According to FNB, the final quarter of 2014 saw South Africa’s Household Sector continuing to lower its vulnerability to debt-service cost “shocks”.

While still highly indebted and highly at risk, in 4th quarter 2014 South Africa’s Household Sector continued to gradually lower its vulnerability to any unwanted interest rate hiking surprises or economic shocks, by further lowering its Debt-to-Disposable Income Ratio. According to the South African Reserve Bank, a further decline in the Household Debt-to-Disposable Income Ratio, from a previous quarter’s revised 78.1% to 77.6% in the 4th Quarter of 2014. This brings the cumulative decline in the ratio since the early-2008 peak to 11.2 percentage points, which is significant.

All of this means that the Household Sector is moderately better positioned to weather an interest rate hiking “storm” this time around compared with 2008/9, due to its overall level of indebtedness being considerably lower these days compared to that period.

Another angle to take in answering the question is to look at buyers who are acquiring Buy-to-Let investments. The 1st quarter 2015 FNB Estate Agent Survey pointed to no further increase in the significance of buy-to-let buying in the market compared with the previous quarter. By this FNB means that, as a percentage of total home buying, buy-to-let purchases are estimated by estate agents who responded to the survey to have remained unchanged on the previous quarter at 9%, the 3rd successive quarter of this estimated percentage.

FNB believes this percentage trend is a healthy one, reflecting that the property market is not running away with itself as it did prior to 2008’s sub-Prime crisis. The percentage remains mediocre in comparison to the estimated 25% back in the boom times of early-2004. Household Sector Real Disposable Income (simply, what we put in our pockets) growth remains constrained by sustained weak economic growth for the foreseeable future, while Government taxes, fuel levies and statutory costs, like electricity, continue to rise.

In addition, the rental market’s performance in recent years has remained lacklustre. At low interest rates, people would rather try to buy their own property. In the Western Cape though, the value for money by renting often exceeds what similar payments per month on a bond could buy. In other words, rental returns are low compared with Gauteng.

Nevertheless, a stable buy-to-let percentage of total home buying should imply a gradual rise in the volumes of buy-to-let purchases, because we have seen gradually rising overall transaction volumes in the residential market in recent years.

Looking at 1st time homebuyers, the 1st Quarter 2015 FNB Estate Agent Survey once again returned a strong estimate of 1st time buying levels expressed as a percentage of total home buying, although a little down off the peak percentage of a few quarters ago. FNB believes that the mild decline may just point to a slow decline in home affordability that has appeared recently. Obviously, this would deteriorate quicker if interest rates were to rise.

According to the sample of agents FNB surveyed, 1st time buyers were estimated to be 25% of total home buyers. This is slightly lower than the 28% high of the 2nd quarter of 2014, and the percentage has now been lower than last year’s high point for 3 consecutive quarters, causing the smoothed trend line to point slightly downward. As before, FNB believes that the mild decline may just point to a slow decline in home affordability.

FNB has two very interesting indicators. FNB’s Home Affordability measures include the Average House Price/Average Labour Remuneration Ratio, as well as the 100% Instalment on an Average Home Loan/Average Labour Remuneration Ratio. In simple terms, these two indicators measure how affordable it would be for the man-in-the-street to buy a house and make the payments on the bond. These indicators started to rise in 2014 after prior years of decline because of the net result of house price inflation exceeding wage growth, and of course the minor interest rate hikes last year.

It would appear, too, that an increasing portion of 1st time buyers are indeed concerned about house price increases and affordability challenges, according to FNB. “Buyer Panic” refers to a state of mind where aspirant 1st time residential market entrants begin to fear that if they don’t buy a home quickly, the price levels will rise to levels where property becomes unaffordable for them. This can cause “inappropriately high” levels of 1st time buyers over-extending themselves financially as they attempt to get a foot in the property market “before it is too late”. This, in turn, can cause market “price bubbles”. FNB considers the market still appears to be far from this point but buyer panic must always be a concern where it exists.

So back to the question, Will the South African home market remain somewhat buoyant? It would appear from the above that the market is better than recent years but not over-heated or unreasonable in any of the residential property sectors. So, we will probably retain current growth levels for the foreseeable future.

A closing comment. Interest rates may not be the key determinant of home buying. There is a large dose of “Confidence” that comes into play. Think of it this way, when you buy a house you want to know it’s for keeps and your work circumstances are stable and certain. Fear of job loss, and a sense of uncertainty about the future could keep you renting.

Let someone else pay off your property!

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Let someone else pay off your property! Buy-to-Let is popular worldwide for investment offering great returns that could even be used to supplement your retirement funds. We apply for you and take you through the process step-by-step. For more info go to www.homeloanjunction.co.za

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