Homeowners
Band Together To Get A Bond
Aspirant buyers struggling to get mortgage bond approval might look at a co-ownership agreement with friends or family. The banks are quite happy to lend a hand…
Although bond applications in the first quarter of this year (2011) reached their highest level in three years, aspiring home owners are still struggling to get mortgages. As a result, applying for a joint mortgage bond is becoming more attractive for people trying to enter the residential property market. It is not unheard of for couples, whether husband and wife or about-to-be-weds, to apply for bonds, but the current trend goes beyond this — with friends grouping together to source finance and enter into joint ownership agreements.
Absa Bank’s home loans division says that it does not restrict the number of members.
Furthermore, the lending banks are looking favourably on such arrangements as an alternative to suretyships under which recovery of debt in cases of default is often difficult. Now they prefer guarantors signing as co-owners.
In a recent poll, 38 percent of people surveyed believe that partnering with friends or relations to get a bond is a positive option. 36 percent of those surveyed were opposed to the option, feeling that it posed too much of a risk, and 26 percent believe that it should be considered but only if absolutely necessary.
Qualifying For A Home Loan After Bankruptcy
Frequently Asked Question:
When bank see bankruptcy on your credit report does it turn them away from lending to you? What is the best way for me to rebuild my credit? I have started by getting two credit cards and have never been late with a payment, but what else can I do? I would like to purchase a house soon, but I’m afraid to try
Reply:
Bank probably will be reluctant to lend to you, especially if the bankruptcy is recent. In today’s economy, banks are much less tolerant of risk, and bankruptcy is a strong indicator of lending risk.
You might be able to qualify for a home loan depending on how long ago the bankruptcy occurred and how you have managed your credit since. However, there is a strong likelihood that you will have to pay much higher interest rates and fees to qualify.
You are doing the right things in terms of rehabilitating your credit. You’ve established new credit and are paying the bills on time. Continue to do so and keep the balances low. You also need to make sure you are saving enough for a large down payment and will still have savings to cover repairs and emergencies.
It’s difficult, but you have to be patient. You didn’t get into credit trouble and have to declare bankruptcy overnight, and you can’t become a great credit risk overnight. It might take months, or maybe even years, but keep doing the right things, and in time you will restore your strong credit history and be able to qualify for that home loan at good rates.
Get the most out of Sell To Rent Back agreements
What are Sell to Rent Back agreements?
A sell to rent back plan is an agreement that enables homeowners to sell their properties to a bank, investment company or individual, and then continue living in the home by renting it back from them.
Why would you want this?
These agreements are typically attractive to homeowners who are struggling to manage their bond repayments. As a way to prevent the bank from repossessing their property the owners would approach a company that offers the Sell-to-Rent-Back option.
If you find yourself in a situation where you are unable to manage your monthly bond repayments your first step should be to contact your bank or mortgage lender. Contrary to popular belief, banks are not trying to force people out of their homes. Property Repossessions are a long and expensive process.
Your bank would rather refer you to a reliable Debt Counsellor who, after assessing your finances, will offer you a number of solutions to help you get back on your feet.
After contacting your bank, you may begin exploring the option of Sell-to-Rent-back.
There are number of institutions available in South Africa that you can approach.
These investment companies will offer you up to 70% of the true market value of your property.
This is typically a very troubling time for you and your family, therefor the sales are often concluded very quickly and very discreetly.
If you choose this route, ensure that your have your own valuation done by an estate agent or certified property valuator. This will ensure that you get the maximum payout for the sale.
After, the sale is concluded and your existing bond is settled, use the extra funds to settle your outstanding debts. Your full focus should be on restoring your finances to enable yourself to buy your property back, or buy a new property.
Sell To Rent Back agreements have the advantage of offering you protection from repossession and a blacklisting, but you should realise that this is only a temporary solution to your problems.
Don’t sit back and be content with just renting your property forever. You can be a homeowner again, it just takes a little more effort.