Friday, 22 July 2011

Wie de f.... is in beheer meneer!

Well its not often that we find the banks being funny about things but they really are and when you try get money, or change accounts or heaven forbid try get money back, or just go and deposit some cash into your account - you know you will be challenged.

Well , look at and follow the bank antics and it must bring an awesome smile to your dial, because you know, that this is what has happened to you, or a friend or someone, at least once.

I certainly have some empathy for the banks because no matter what they do, no matter how many processes they put in place, somehow, it goes wrong very quickly.  Maybe because it is 25 million people to 100 branches odds that nails them, and someone is going to be mad!

Without singling out Standard bank, ABSA, FNB, Nedbank, Capitec, RMB, Investec as a culprit, these are a few snippets for this wonderful Almost Spring Friday (ASF!)

1. Self employed client, who has banked same bank for 22 years wife banked with same bank for 17 years and has business account with bank as well.  Wife started new business sponsored by Old business and backed by surety from both clients and the bank refused a 50% mortgage due to " Could not confirm relationship with the client"...eeeeeish  Client went to and voila home loan granted withing 3 hours.  They had submitted their home loan through the mortgage originator on the advice of the bank - 7 times and it only took 6 and a half weeks.

2. Well not to be outdone, one of the other banks took 12 weeks and 9 submissions to get a R 100,000 home loan as a further loan because they could not prove her company she works for was a legitimate company - she works for PAM GOLDING! - must be some obscure company

3. Bank no 3 - Electronic payment done to incorrect client from one client - pure mistake (finger) problems and reported it to the bank to cancel.  Went to recipient bank explained mistake and sorted that out.  Refund happened as follows:

Sending bank refunded the money 4 Times
Receiving bank refunded the money 3 times

at R 285 - a pop this was a win, so went back explained the mistake to sort out and guess what nothing has been done except Sending bank refunded 1 more time and receiving bank refunded 1 more time

Maybe we should all work with these banks... Bless them and have a great weekend

So as they say in the country... Wie de f..... is hier in beheer meneer!

Thursday, 21 July 2011

Wanna be an Originator Apply here!

As this has often been a fairly open and new industry the regulations are very much self imposed and we have had bodies such as NAMO try regulate the industry but they have not succeeded.

So as business owners we have searched for the best of breed and this is the way i see it:

1. You need to be a 100% peoples person – as people will only do business with you if they trust you and like you.  So APPLY TODAY

2. You need to be extremely confidential – and this must be legally set out and signed before your start as a consultant or originator.

3. The educational aspect most times means

     a. Financial experience – accounting, auditing
     b. Understanding income and expenditure
c. Understanding credit risk management, scoring systems, high and low risk
d. Understanding affordability for now and future as rates rise and change and impact on the client
e. Doing due diligence on a client and understanding 100% their involvement, business, employment and exposure
f. Understanding how to read:
    i. A balance sheet
     ii. Assets and liabilities
     ii. Bank statements

g. Understand how to look for fraudulent activities with employer, employee, business and banking

4. Legally a detailed employment contract together with multiple clauses covering the lenders, the originators and the clients is signed.

5. Skills looked for:

a. Banking experience

b. Any finance experience

c. Credit risk management experience

d. Property type experience

6. Lastly, the banking rules change often, so training is needed all the time and you need to be updated and accurate

One of the key things is to declare the truth to the banks as we abide by the banking code of conduct.


The originator warrants that this application and supporting documentation is submitted by the originator on behalf of the applicant/s with the applicant/s knowledge and consent. The originator warrants that the applicant/s have chosen the mortgage originator’s address for delivery of the quotation to the applicant/s. If signed on the applicant/s behalf, the originator warrants that is has been duly authorised by the applicant/s for this purpose. The originator further warrants, to the best of its knowledge, that the documentation / information submitted by the applicant/s in support of this application is not fraudulent, incorrect or misleading.

So this is a serious business..

Tuesday, 19 July 2011

PRIME + Standard Bank and FNB interest on homeloans status

So the banks have definitely changed their risk profiles and increased the premiums on rates following the article recently released by FNB.

Now we learnt through reliable sources that Standrad bank have increased their risk rating under certain circumstances.

For those applying for a home loan and are self employed expect a rate plus 0.3%.  If a small holding or plot expect anything from an extra 1.5% to 2.5% and if a Business Mortgage expect an additional 1.5% on top of the normal rate.

Defintely time to use your favourite bond originator.

we expect the other banks to follow suite shortly.

  thanks to our news feeders for the thumbs up guys.......

Thursday, 14 July 2011

Who is recovering in the Worlds Housing markets?

According to data compiled by the Economist, only one national housing market has recovered to “fair value” after the real estate boom of the late nineties and early 2000's

Disregarding the housing markets in Germany and Japan, which did not witness a property boom in this period, the US is now the only global market (which the publication analyses) where prices are below the long run price to rental income ratio.

South Africa, seems to be OK, but its very up and down even though slaes seem fine in the lower brackets and banks are offering mortgages albeit tentatively.

According to data compiled using the Case Shiller national index, prices are now 11.5% below “fair value” which compares to overvaluations of 48.5% in France, 39.2% in Spain and 27.8% in the UK.

Although there is some debate over the Economists measure of “fair value” (house prices are more a function of affordability and therefore real incomes and interest rates rather than rental incomes) the conclusion is probably a sound one. The US housing market is in better position than most Western markets.

At the turn of the year, we tipped the US market as one of the best markets for investors and agents. The news since then has been far from positive with prices continuing to decline in most regions (although sales volumes have picked up in many states such as Florida)

The best property market in the world?

Well you certainly can pick up awesome deals for properties in possession and these lists are easy to come by, with 100% homeloans and cheapper trasnfer or no transfer fees.

Although the social consequences have been awful, in pure economic terms, the US property market is arguably one of the best functioning real estate markets in the world.

The US fell earlier and more rapidly than almost every other national market. A big reason for this is the US system of non-recourse loans. Home owners in negative equity can walk away from their debts and developers and lenders have no recourse to reclaim the debt. The result has been a flood of supply and sharp price corrections.

Almost every Western economy is going through a process of painful debt reduction. There are only four ways out:

Save more (austerity at both a personal and government level)

Earn more (increase real incomes and/or economic growth)


Debt default

Through a process of mortgage debt default, the US has put itself in a strong position to recover strongly from the credit-bubble-inducued recession (although it still has severe sovereign debt issues).

As Robert Shiller points out, US house prices may decline another 10-25% so the crisis is not over but its long term position is much healthier than most European markets.

The UK and Spain for example face a long period of “deleveraging” which means either high inflation, austerity or a sharp rise in repossessions. Without a mix of all three for a sustained time period, there can be no return to a “normal” market and that means no short-term bounce back in the lifestyle market of overseas property.

Tuesday, 12 July 2011

Buying a place in the bush - the finer details!

Hi Geoff,

The bush sells itself, but is nice to know I may have influence.

So, How much do you need to raise? For properties zoned as Agricultural farms (like this one) and over 25ha it becomes quite difficult to raise cash and unfortunately takes longer than a normal home loan.

So yes 90 days may be needed. But to be fair houses and stands can take that long at times as well. It all depends on how quickly we can information to the bank regarding your financials, tax, banks account statements etc.

I utilise the services of Global Fundi for financing advise and while they do not raise finance for larger farms can offer excellent advise and recommendations. They can also assist to bring finance into the country at very favourable rates. I will ask Chris to contact you, as he can explain the best options for doing so.

Kevin the seller was thrown a curve ball this morning!

He has been on a waiting list for buffalo calves because he would like them to get stuck into the long grass to reduce fire hazard. 6 became available and will cost him R16,000 each totalling R96,000. Obviously if he sells the farm he does not want to add more game to the offering and the value of this game cannot be included in the asking price. He wants to know if this will be a deal breaker. I would be a pity for him to loose such an opportunity stock is not easily available. The average auction price in 2010 for 56 auctions was R35,000 for a fully grown buffalo. They want to BOMA them on Friday and have Vets and staff lined up to do so. Let me know your thoughts?

Wish all deals were this cool!!

Friday, 8 July 2011

The banks get tough in their home loans lending

100% home loans - diminishing as we speak - but still possible.

Interest rates of -2% below prime - forget it - you are lucky if you get prime and it will get worse for a while.  But our rates are at their lowest in 30 years so that's great news.

1  * Bounced cheque on your last 3 months bank statements - better you wait until the next three months cycle before you apply for a mortgage.

Adverse on your credit report - get it sorted and get it removed and get letters and even then you are bound to be declined by the banks first.

A Judgement - get someone else to buy the house because you are just not going to get a loan, unless you own your own bank.

Get a credit check if its the last thing you do and understand it.

Self employed - well you need about three tonnes of documents including 3 years financials, 6 months business bank statements, blood tests and 6 financial sponsors - very tough at present.

If you earn as a salaried employee an amount of between R 10 and up in overtime, commission you better get your 6 months payslips, commission statements and letters from your company proving that you earn occasional extra income otherwise your whole profile will be seen as suspicious and you WILL be declined.

if you are non-res, non SA type make sure that you have approval to bring your money in, an excellent money transfer service, attorneys that are jacked up and 50% is the max you will get and probably from 2 banks only.

So folks that's the good news....and its bound to get better.

Want a home loan - well use a mortgage originator because they are the only people who will tell you like it is as they earn their hard earned living from this business.

Thursday, 7 July 2011

Forget about -2% below prime.

No more -2% You!
Well we have been telling our clients for months now.  Our rate cycle is at its lowest in 30 years (remember 24%)  eeeish.  The war on rates is a thing of the past and the average rates clients are getting in the past 10 months is more like prime less 0.3% or 8.7%.  Vacant land you pay a premium and in part of ensuring deals still happen the mortgage brokers are trying to "convince" banks not to lose clients to rates.  Well no-one cares about that anymore.

Standard Bank rates for non- Standard clients is definitely higher - thats the way it is.

First National Bank is seriously evaluating whether lending at prime is still a viable option for Home Loans and may soon add a percent to the cost of its borrowing rate for most new customers seeking new home loans and to existing customers wishing to take on further loans.

The rethinking comes as the cost of funding and the rate at which the bank borrows is becoming more expensive for the long term.

“We have to reevaluate the rate at which we are offering home loans, partly because of the cost of raising money from the market ... we should on average be at prime plus or prime plus 1.5% or 2% ... It is imminent and we have to make the change,” CEO of FNB Home Loans Jan Kleynhans told Moneyweb.
“We believe home loans are still under priced and we believe it’s going to change. We don’t think it’s sustainable at the current levels.”

Asked if FNB was not worried that it would lose customers due to the adjustments in the lending rate for home loans, Kleynhans said:

“There is that risk but if input costs are too high then we have to make do with those tough decisions and face reality. We have made significant price changes before and the market followed and made the adjustments. We think it will happen again."

When I hear this I truly understand the frustrations that will happen between clients and banks and mortgage originators friends and families - the fall out will be great.

Gone are the days when the mortgage originators pay commissions for deals, they are working far to hard to get the deals for agents and it will not be long before the banks will fall back to a select few as lead generators and drop the commission agreements they have with real estate agencies. 
We know that the other banks or some of them have  already repriced at prime-plus.

Kleynhans added that everybody knows about Basel III. In most market segments, consumers need credit first and then looking at the rate offered by the bank. The demand for credit is a bigger issue than what the cost of credit is, from a consumer perspective, and that’s why we think it’s time to make this next adjustment.”

The cost of doing deals are lying squarely on the banks backs and many mortgage originators are doing the same by carrying the upfront costs themselves, providing quality and very clear applications giving the banks the advantage of making a simple aye/nay decision.  This does not mean an increase in commissions at all for the MO's, purely a simpler more cost effective approach.
Kleynhans said, despite the evaluation of prime lending, FNB offered the customer a value added service when buying a house and was not just a pure credit provider for home loans. He said the bank offered would-be buyers in-depth information about the market value of a new home and the prospects of capital growth in that particular suburb.

The bank also has an arrangement where distressed property owners sell their properties to avoid legal obligations. If there is a shortfall between the selling price and the loan amount, FNB recovers difference at zero percent rate for ten years, according to Kleynhans.

Nedbank too, have an awesome reseller service of distressed and PIP properties with a wonderful hands on approach.
The head of FNB Home loans also noted that the bank was not expecting much growth in the mortgage market as household budgets remain under pressure from expenses such as transport, electricity, municipal rates and education costs. Kleynhans said currently FNB declined 50% of home loan applications due to poor credit records and unrealistic expectations by consumers looking for more credit than whats available to them.

FNB, ABSA still entertain 50% loans from non-residential clients at fair interest rates for now but the key is doing a 50% money transfer of deposits and the send money to South Africa as per Reserve bank requirements.
He added that unlike five years ago when the majority of its home loan applicants got 100% funding, this was no more the case. Kleynhans said about 20% of new mortgage applicants were given 100% funding and those were people with “squeaky clean” credit profiles and good income statements.

The customer’s ability to pay and the suburb where the house was situated also contributed to how funding should be structured.

In terms of market conditions this year, Kleynhans said defaults were extremely low and people who were still struggling with arrears were those who got their loans in 2007-2008.

“We are not seeing new arrears from new loans that have come through last year. I think we are lending appropriately from a point of view of affordability ... We always worry about the level of expenses and the cost of living consumers are bearing.

Despite the call to customers to fix their rates, Kleynhans said FNB was fixing a few home loans as some people did not fully understand the value of fixing now

Its time to be  smart in our financing.!!!

Tuesday, 5 July 2011

Make the most of Auctions

Many houses, apartments, luxury villas and dream safari lodges (to name a few) are being auctioned! Whatever the reason - the focus of this chat is how to make the most of these auctions if you are looking for an investment!!!  

Auctions are an age-old proven method of selling property. No matter what the reason behind the sale - the point is that the property NEEDS to be sold URGENTLY!! Property auctions are great ways for investors to purchase property inexpensively. So how can you go about this - here are some tips that may help you!!!


  1. Know all the details of the auction - try not neglect the little details - this is a great way to gain as much info on auction property as possible prior to auction date! This is a great way of sifting out the properties you are not interested in.
  2. The info made available is often vague and limited - investors must always dig deeper to learn the affordability and potential problems prior to investing in auction property. Prior to the auction keep in mind:
    1. Get finance in place or a loan pre-qualification before the auction to speed up the purchase process.
    2. Invest time in researching properties online independent of what is available from the actual auction company.
    3. Get a comprehensive valuation of the property, decide on a reserve price for sale and a ceiling on a purchase price for buyers.
    4. Understand the deal fully - costs, deposits and the finance process.
  3. Auctions offer a great mix of potential investments - look for the category that interests you! Categories include - residential, industrial, retail, office and hospitality! Many quick sell auctions information are available online are from the commercial banks and private lenders hoping to sell property quickly. These may not be advertised as heavily. Keeping tabs on foreclosures happening in the local area can help investors find potentially valuable properties operating in the auction arena.

Use online auction real estate listings and services and other foreclosure services to find potential auction properties before other investors purchase them. Foreclosure listings are public information but are generally difficult to find.

The global financial crisis/recession has made trading conditions difficult resulting in adverse effects on the property market and for property owners. No matter what the reason or category - a lot of properties have  come onto the market in an auction-type sale. At present the market is in a long slow recovery process and will not have a dramatic change over the next 6 months.

It is expected that genuine recovery of the property market will only start to show towards the end of 2012. Investors who invest long-term who demonstrate patience will always reap long-term benefits in real estate no matter what category they invest in.

For investors, auctions are a great ways of buying investment properties (throughout the world) and the time to do so is now!!! With the predictions as they currently are - you should reap major benefits in the last quarter of 2012!!

If this interests you - look at using money transfers as the way to purchase the property! Using this method will save you hugely - you save when you use online money transfer services and save on the auctioned property!!!

Monday, 4 July 2011

Dubai property market on its way up! Time to invest NOW!!

Moving into the 2nd half of 2011 it seems the UAE is on the move back up the property and opportunity ladder and out of the global recession and its aftermath! There is change in the UAE after feeling the heavy burden as a result of the recession. New projects are in the pipeline and previously disrupted projects have regained momentum which already seems to be attracting new opportunities and generating new areas of employment - yes there is a definite change being observed. UAE is attracting  foreign investment as a result. If there was ever a time to make an property investment move. Now is your time!!!

Qatar and Bahrain are investing and making additional plans to invest in Dubai which should further increase the investment possibilities in Dubai and employment opportunities will most likely be rolling out in the near future.

So where does property fit in - well with an increase in opportunities - investment and properties are on the rise. A significant number of people around the globe are heading towards Dubai. Demand is matching supply, property prices have started stabilizing and it is a great time to get involved before the prices start regaining strength. It really is the right time!!
Invest, send money or buy property in Dubai, UAE.