Tuesday, 10 July 2007

Rudco - Home Loans @ 6% - WATCH OUT!

What is Securitization and where did it originate from?

Happy Friday to all you readers out there. It's been a long a busy week for home loan and mortgage originators with all the HOOHAA of the National Credit Act. It does however look like the banks are slowly starting to get things under control again. Just to let you all know. Bank Submissions are now taking 10 - 14 days. It's no longer the 5 day turn around time we've all become accustomed to.

Global Property

Anyway back to the topic of the day. RUDCO Finance Company.

Let me tell you these RUDCO boys are causing quite a stir at the moment. Take a look at the article on MoneyWeb's site: http://www.moneyweb.co.za/mw/view/mw/en/page38?oid=145005&sn=Detail&ccs_clear_cache=1#CMT_ANCHOR.

Apparently you can get your home loan now @ 6% interest. Be careful people, when a company (Rudco) claims to have financing from a external source and they're not backed by the banks or registered as a registered financial institution, those blinkers should start flapping.

Firstly: Who does Rudco get their financing from, and why are they not disclosing it.

Secondly: Rudco claim to be using the World Bank's interest rate of 5.7% (or something there about) which sounds to me like their money is coming from an international source.

Thirdly: If they go under and you have to transfer your home loan to another bank, you're going to be liable from transfer duties.

And another one: When you're qualified for a bond @ 6%, Rudco goes insolvent, you have to transfer your bond to ABSA and you're now paying interest @ 13% (HOW WILL AFFORD IT)

So my personal opinion, WATCH OUT PEOPLE!

Update:

I've been reading quite a couple of articles relating to these Rudco guys and I'm going to list them here cause I think it's something that people need to just watch out for before they switch their bonds. Consider your costs and consider the fact that Rudco Finance is not a "Fincially Registered Institution". I had a chat with the Rudco personal and they do not provide Financial advice either.

The whole point of going with someone to do your home loan is to get GOOD SOLID financial advice. This once again kind of defeats the purpose, plus you're paying RUDCO for this service. WHAT FOR?

See Car Today Rudco Discussion
See My Broadband Rudco Discussion

Rudco Insurance

21 comments:

Anonymous said...

Couldn't agree with you more. Thinks they're scoundrals...

Anonymous said...

Although I do agree that a certain amount of caution should be taken when embracing Rudco's products. Can anyone confirm if Rudi Visagie is the former CEO of Unibank? This would tend to add some credibility to the venture don't you think. Also, after reading the Sat Independant & Sunday Times, It would appear that the 6% offer would only be for a limited number of accounts (1000) and normal rates would be applicable thereafter. This would tend to sound more realistic to me. Also interesting to mention that SA Home Loans was met with the same negative approach, and look where they are today... only time will tell I suppose.

WizardMan said...

Hi Anonymous,

Well yes to a certain degree I agree with you, but I do believe that a company like this should always disclose more about their financial backings and status.

As for SA Homeloans, I've never liked the way they do business however it's tough to argue my point about their moeny lending methods when they're such a successful company.

But I don't wish them ill fortune and if they do prove me wrong, good on them!

As for Rudi Visagie, I'm going to do a little more homework on them so keep posted!

Thank you for the comments.

Anonymous said...

I heard about this and I thought let me do a little research of my own.

The consultant that I spoke to said that they couldn't give advise because they were not registered with the FBS but when you call a bank and ask for advice they tell you that they are not allowed to give you advice you need to see a financial advisor and yet you are at a bank. So on that point I understood. I would also tread very carefully when coming to them as they are new on the market.

Some one once said that you need to give some to get some and maybe that is what their strategy is they are trying to lure clients their way especially with the new NCA where everything seems to get declined or takes longer that usual to be approved and they check everyting and the next thing that they are going to be asking for will be a strand of hair to be faxed through so they can check your DNA sample while they are at it.

I think that we are a nation that is afraid of change and when something new comes up we are quick to look at the bad sides instead of the good that could be there.

When one of the big banks in SA closed their doors their bonds were taken over by another one of the big banks and till today those people never got their concession ( discount )below prime changed.

It might be a good thing and yet it might not be as good as it looks on paper but only time will tell. For the brave souls go ahead

Anonymous said...

Yip, this is indeed a tough one. I enquired and it seems that your property will be registed in their asset register, even though your property will remain registered in your name, which effectively means that the asset value will have to be supplemented should Rudco default to such an extend that liquidation is inevitable.

However, this could also bring a positive result for the consumer. Let's take the cheaper airlines as an example. Everybody suspected the cheaper airlines would use something like "Vice-grip" model aircrafts, but instead, we now have 3 cheap airlines to choose from. Who knows, we might be lucky with better interest rates this time around..... why don't we give them a chance?

Anonymous said...

Considering the pro's and con's - if I only had to start paying off my bond AFTER registration and my initiation fees at the Attorneys to be transfered to Rudco ON registration, I would switch all 14 my Bonds today.

Rudco is in the process of registering for a bank and they need asset values. In my opinion, this opening special is merely a tool to obtain the necessary to reach their target. I have no doubt that they will be placed in a well competitive spot in the market place and the main players will be forced to offer competitive rates as well. It could eventually become the breather we have all been waiting for - aren't we all aware that Sout-Africa is one of the most expensive Countries as far as Bank Charges and interest rates are concerned?

Anonymous said...

Opening special I agree

I have no doubt this is to lure folks in and come with consolidtion etc as without doubt they can make better money in a moneymarket account. So they will need other investments etc from you to make money....I am going to call tme and try one of my properties thats not financed yet!!! WIll keep you posted Guiseppe Verdi

Willi said...

I was, like everybody, buzzing about Rudco and also “Goggled” it to the fullest extent.
I have to agree that it is impossible to lend out debts cheaper than what you can invest the capital.
Thus mean, I can switch my home loan to Rudco, take as much as possible extra cash and invest it for more than 6%.
There are too many grey areas, and Rudie Visagie does not seem to be able to answer it all.
To answer Wizardman – he does not elaborate why he does not like the way Sa Home Loans is doing business – is it because they do not pay commission to originators?
One cannot mention the name SAHL in the same breath as Rudco – the way these 2 companies conduct business are very far apart.
SA Home loan strictly operates under securitization and base their core product interest rate on JIBAR + 2, 5%.
To explain; JIBAR is the rate that banks lend money to each other, which is cheaper than lending money from the Reserve bank at Repo.
SA Home Loans also has shareholders, where Standard bank is the main shareholder with about 46% shares.
I tried to get onto www.rudco.co.za – under construction, than www.rudcofin.co.za, what I have understood under their switching is that you have to pay for transfer. I apologise if wrong, but if you would transfer your house to Rudco they can put it up for collateral and if they do not perform, you will have your home up for action.

WizardMan said...

Hi All,

Once again thank you for all the comments and input that everyone has added in....

Just to reply to Willi, my apologies for putting SA Home Loans into the same category as Rudco, that was not my intention and I should've elaborated. To avoid making this a 17 page comment my article on SA Home Loans will tell you what it is about the way they operate that I have a problem with.

Back to Rudco though.

I think alot of the anonymous visitors and comments to my site have made some good points. I think the most valuable point that has been made here if that those with existing home loans may think about making a switch, this way you already know you can afford the bond repayments if you need to ever switch back!

REMEMBER TRANSFER FEES NEED TO PAID! SO WEIGH UP THIS OPTION!

If you switch from 13% to 6% you're in essence loosing out of 7% interest that you could be earning if you paid a little extra into your bond account. Bond interest is paid on a daily basis and for ever little cent you put into your bond account over and above your bond repayments you're earning 13% interest.

Now you're only going to be earning 6%. But for those with more than one property, once again this may be an option to look at.

Thanks again for everyones input.

WizardMan

Anonymous said...

As far as I understand RUDCO also pays 10% commission for the life of the loan.... That brings Rudco's profit down to 5.4% before expenses. I just can't see how they can survive. Rudco really needs to explain how they intend to remain solvent.

Twenty Third Floor said...

I also blogged about this - my take is that the business plan still makes no sense from their side, so it's either foolish on their part or downright dodgy. Simple as that. Would you buy a brand new 3 series for R3,000? Why not?

Parrot boy said...

I also saw the Rudco advert in the property section and made contact. I was not too happy with the "cloak and daggers" answers i got. I see that their site is now up and running and since i am in the home hunting market i am going to "give them a try" - i can always move to another provider if i get the run around - will keep you all posted as the process rolls out.

Anonymous said...

My instincts tell me that there is something wrong. Here is my take (please note that this is my opinion and is not founded on any factual evidence � the figures I have used are the ones published in the newspapers).
They are apparently only going to issue 1000 bonds, ok let�s do some numbers. (if this were a scam, how much money could they be making?)
Initiation fee = R5700
Monthly Admin Fee = R57
Hypothetically they issue on average a R1 000 000 million bond.
Monthly PMT = R7172.70.
Commission = 10% of monthly PMT to the bond originator

So they are saying that they will only finance bond switches.
So every person that signs up will in fact be subjected to the 3 months cancellation of their current bond.

After three months here is what they could possibly make:
(R5700 * 1000) + (57 * 3 * 1000) + (7172.70 * 3 * 1000) -(0.1 * 7172.70 * 1000)
= R 26 671 830 in three months before they have to pay out 1 cent. What�s to stop them from taking this money and disappearing?

Anonymous said...

So just when I was thinking their is someone out there that can HELP me get out my financial mess - debt consolidation - So that I can survive each month! You guy´s are telling me not to this! Just tell me is out there to help someone in need and desperate. 31/07/2007

WizardMan said...

Hi Anonymous,

Debt consolidation, it's NOT contrary to popular belief the way to fix badt debt. It's a quick fix but why do you think companies do it, TOO MAKE MONEY. It's going to cost you more in the long run anonymous. Send me a mail, lets chat wizardmidrand @ gmail.com

Nick said...

Good website, need your feedback/advice though: ABSA Bank changed a friend's home loan rate for no reason at all. Instead of charging her interest of prime -1.95%, they’d dropped the rate to -1.35%.
That amounted to R13,000 extra ABSA Bank charged a home loan client over a period of years. Are you aware of similar stories, and are there companies who check this as a service to clients? If so, which?
Please respond to vanderleekn@johncom.co.za as we would like to publish an article in this respect.

Chris "The MAGE" said...

Nick

I sent an email to vanderleekn@johncom.co.za I hope you got it

This should give you an idea

Cheers

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Anonymous said...

Hi I am new to your site and find it very interesting. Being in the same financial mess as everyone else out there I am looking to reduce my homeloan debt to a more affordable option. I've done the commercial banks thing and was wondering Rudco sounds dodgy, but if I could reduce my homeloan repayments, I would certainly consider it. Does anyone have any info on Inteja, not sure if I have spelt this correctly, I have heard the adds on the radio but can't seem to get into their site, something about google does not recognise the name!

WizardMan said...

Hi Anonymous,

Thanks for stopping by, always nice to have new comers.

I do know them and the companies name is Integer Home Loans. In fact I wrote a little article about them too.

They're offering new solutions to the South African market and it's the previous owner of SA Home Loans that's now starting this new company. I don't know much about them and haven't heard of anyone using them, but give them a call I think they're pretty trust worthy.

debt consolidation services said...

Hey thanks for the tip!