With the residential property market reflecting positive market sentiment, Manja Kritzinger, CEO of Realtors International, says that many estate agents and bond originators or home finance experts are in a much better position today to help buyers manage affordability than ever before.
“Homebuyers are-rightly so – more prudent today. A bank’s lending criteria is one thing, but homebuyers should have a finer understanding of their personal cash flows, circumstances and views of the future.
“For example, more homebuyers are having to make a choice between buying a home or up scaling their vehicle. It is also makes sense to base affordability calculations on an interest rate 3% higher than the rate offered,” says Manja.
Kritzinger urges homebuyers to get a prequalified loan certificate and credit report from home finance experts who will conduct a full income and expenditure assessment and run a credit bureau enquiry to ascertain the buyers risk profile.
“Homebuyers should embrace the opportunity to understand their credit position as this puts them in charge of the situation when applying for home finance. One scenario is having a clear credit record, but insufficient net surplus income.
“This is not the end of the world – you’d then either look for a home with a reduced purchase price or look to consolidate or restructure debt to secure a positive net surplus income,” says Kritzinger.
Another scenario is where a homebuyer has a positive net surplus income but a poor credit record. In this instance, the answer could involve some form of credit rehabilitation before buying.
Kritzinger says that structuring of debt by specialists – especially unsecured debt such as credit cards, retail cards and personal loans – can yield significant monthly savings and can prove the difference between getting home finance at all and buying that dream home without draining your cash flow.
“If home finance experts have a clear understanding of the homebuyer’s financial situation, they’re able to offer value-added financial products that will improve the homebuyer’s ability to make a purchase and have the bond approved. Ultimately, the quality of the bond application is improved, reducing wastage, improving conversion rates and improving turn-around time.”
