Tuesday, 30 August 2011

Why you need to motivate your home loan application.

Well it is quite simple.  A motivation is usually provided to highlight or explain anything about your homeloan application that falls outside what would be considered a “normal” application, or even when it you feel it necessary for the bank to have a clearer understanding about you the prospective client and your situation.

For example, if you have finished or are finishing your monthly car repayments now, or in a couple of months’ time, it is important to supply this information in the home loan motivation with the necessary proof to establish the your true and realistic affordability.

Another example may be if you are  a rehabilitated insolvent. In this instance it is necessary to supply a full explanation regarding the circumstances that resulted in the insolvency as well as a copy of the certificate of rehabilitation and a copy of the final liquidation and distribution statement reflecting details of all of your creditors. A mortgage origination consultant would, however, use a motivation whenever they feel it is necessary to highlight positive attributes about the you as their client and the property and to remove any negative attributes such as past adverse credit score and sentiment.

Friday, 26 August 2011

Property Marketshare per bank - changing times

So Std Bank up to 36% - up to 100% loans

FNB maintains 23% approx - up to 100% loans

ABSA drops to 19% - up to 70% loans

Nedbank drops to 12,5% - up to 90% loans

SA Homeloans Climbs to 10% - up to 100% loans

Well what a change from a year ago - you can get a homeloan through a good mortgage originator.

Time to move as rates are bound to come down.

Transfer Duty and Conveyancing Fees

Transfer duty exemption threshold increased from R500000 to R60000. This is good news to new buyers. This step shows that the government is trying to promote home ownership. Let’s take advantage of this as this is entirely to our benefit.  The government by lowering the transfer duty might be losing revenue but they have new home owners at heart. In short, you will pay less transfer duty if you buy a property valued greater than R600 000.The break down is as follows;
On the value of the property that does not exceed R600 000: 0%
On the value of property that exceeds R600 000, but not R1 000 000.00: 3%.

On the value of property that exceeds R1 000 000.00, but not R1 500 000: R12 000 plus 5% on the value exceeding R1 000 000.00.
On the value of property that exceeds R1 500 000: R37 000 plus 8% on the value that exceeds R1 500 000.

The other costs involved are the conveyance fees, deeds office fee and VAT. The conveyance fees you stand to pay depend on who the conveyance attorney is and how much the property costs. The conveyance attorneys’ rates are generally between 0.7% and 1.2% of the price of the house. The fee levied by the Deeds Office to register the deed to the property in your name, depends on the value of the property, and starts at R 55 per registration and VAT, 14% will apply.

Previously companies, CC’s and Trusts were charged at a flat rate of 8% on the whole purchase price for transfer duty, the above scale will also now apply to them as well as natural persons, which will make a huge difference.
At the same time SARS banned manual transfer duty submissions when the new system went live on April 1 and they have introduced the new SARS Conveyancing service.  
As from the 1st of April 2011 the transfer duty Act No 40 of 1940, requires that all transfer duty application must be submitted electronically to SARS.Conveyancers have become the front office of the South African Revenue Service (SARS) as they have become obliged to check whether contracting parties in a property sale are registered for income tax purposes before transfer duty is processed.

Interest rates set to Drop???

So with SA consumer inflation raising by 0.3% from June to July a lot of pressure is being put on the SA Reserve Bank to drop interest rates and curb the rising inflation.

This is great news for those buying a home and looking for a mortgage or home loan, but bad news for those wanting to save.

Take the elder for example they seem to live off the interest from investments and this will smack them hardest.  The younger folk are OK but as the balance of Old versus young swings and people are living longer it seems like those inflationary measures are now no longer working and the drop of interest rates do not tend to increase spending as before.

So those who want to buy and invest into SA may want to make free money transfers to SA and benefit from a better rate and those who want to save, finance a property as a syndication or family group and speak to your best mortgage and financial planner.

We feel that this is the tend between now and the second quarter of next year and with the Eurozone in a quandry, US keeping rates as they are, Gold taking a smack as investors realised cash yesterday and the Libyan situation where it is, its time to only take a long term view and invest in property.  Buy low.

Wednesday, 24 August 2011

Drop in Interest Rates?

Well the news seems positive towards a rate cut.

If we look at the US keeping rates down for 2 years and the state of the finances on the Eurozone this spell better times for property owners and buyers in SA.

This seems to be a great time to transfer money to SA or send money from UK and invest in property at a decent interest rate.  With the Rand being up against the Pound this is even better.

Rate cut expectations grew yesterday as Finance Minister Pravin Gordhan and Reserve Bank governor Gill Marcus warned of the dangers posed by unstable global markets.

Speaking at separate events, the key financial policymakers highlighted contagion risks from abroad.
Marcus told the US Chamber of Commerce in Johannesburg that the global economy was “moving perilously close towards a precipice”. And she said: “In the event of a significant global downturn (South Africa’s) monetary policy will react appropriately.”

Gordhan said at the Banking Association’s summit: “The uncertainty of the stability of the European banking system, the European sovereign debt crisis and the recent US downgrade constitute serious downside risks.”

Marcus’s comments were interpreted as a sign the bank’s repo rate could be cut further from its 30-year low of 5.5 percent. Citi strategist Leon Myburgh said rates on forward rate agreements fell 10 basis points in the morning.

Until late last week, they had been signalling a rate hike but they changed direction on Friday, Myburgh said, after a week of poor economic data at home and abroad.

Before last week’s market turmoil, the market expected the next move would be up.

Citi economist Jean-Francois Mercier said Marcus’s comment did not signify “an imminent cut” but suggested the bank’s monetary policy committee would ease further if the global situation kept deteriorating.
He said: “The start of policy tightening now appears a long way off, maybe not before the second quarter of next year at the earliest.”

Marcus referred to South Africa’s disappointing second quarter performance, with manufacturing and mining “likely to have subtracted growth”.

And she cited second quarter growth of only 0.2 percent in Germany, the “powerhouse” of Europe, and the revision of US first quarter growth from 1.8 percent to 0.4 percent as evidence of “a synchronised downturn in advanced economies”.

Both Gordhan and Marcus quoted the work of researchers Carmen Reinhart and Kenneth Rogoff, on lessons from financial crises. Reinhart and Rogoff divided financial crises into three phases: a prolonged fall in asset prices; a fall in output and employment; and finally an explosion in government debt.

Gordhan noted: “Internationally, we are seeing the third phase in full swing.”

Reflecting fears of sovereign risk, gold continued to break new records early yesterday, as the market bet that the US Federal Reserve would announce a new wave of quantitative easing at the weekend.
Recent market moves carry some benefits for South Africa. The rand, which traded at around R7.22 against the dollar yesterday, is weaker than its R6.60 level in April – a potential benefit for local manufacturers.
And a falling oil price could offset the inflationary effect of the weaker currency .

Also good news is that the Reserve Bank reported yesterday its lead indicator rose in June to 133.8 points from 131.4 – reversing a downtrend, with seven of its 10 available components positive. This points to possible economic resilience

Send money to SA now.

Tuesday, 23 August 2011


Credit checks help you make well informed and confident decisions about persons you will entrust to living in your property. Information you need to get is:

  1. Does the candidate have a criminal record?
  2. How long did the individual(s) live at a past address?
  3. What type of tenant was the individual(s)?
  4. Are there any evictions or civil judgments filed against the individual(s)
  5. Did the individual(s) pay the assigned rents on time?
  6. Ensure that the bank account details provided by your customer are correct
  7. Name, address, ID number, and date of birth.
  8. If he/she has moved in the last two years, their previous address.
  9. The amount of their monthly rental payment.

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy.

Credit bureaus sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. When the bills are not paid, the delinquent account is reported on your credit report. And it’s this kind of information that could affect your ability to get credit, insurance, or even a job.

A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. There is no time limit on reporting information about criminal convictions. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until it is paid

Thursday, 18 August 2011

The Pound rallied against the Euro

This article was brought to us by TorFX.

The Pound rallied against the Euro yesterday, briefly trading above the 1.14 level, while the UK currency also made gains versus the majority of the 16 most-actively traded currencies, after a government report showed that UK inflation accelerated by more than initial forecasts at 4.4%. Consumer price growth makes it less likely that the Bank of England will loosen policy further and implement further quantitative easing measures to support the economic recovery.

The Bank of England governor Mervyn King remained steadfast in his belief that inflation would naturally slow below the 2% target over the coming months. Concerns surrounding the global economic outlook has hurt growth prospects, while the turmoil in Europe poses a risk to the UK. The Euro also weakened against the U.S Dollar, following a report that Euro-zone economic growth slowed by more-than-expected, adding to concerns that peripheral economies will struggle to manage debt levels.

The Pound rose 0.5% against the Euro, registering its fourth gain in five days, while the UK currency also rose for a fourth straight trading day versus the U.S Dollar. Investors are betting that the Bank of England will keep interest rates unchanged until after July 2012, according to the Sterling overnight interbank average. As recently as February, the data indicated that traders were betting on a rate increase this May, which gives some sense of how the economic outlook has weakened over a very short period.

The BoE governor Mervyn King said in a public letter to the Chancellor George Osborne that "recent developments in world stock markets and in the Euro area are of particular concern. There's a risk of severe stress and dislocation in financial markets and, were this risk to crystallize, it would have a significant impact on the UK economy."

With inflation rising to 4.4%, the Bank of England can't afford to consider embarking on further quantitative easing measures at this time, but a rate increase to quell consumer price growth could have a further damaging effect on the economy. This poses a difficult dilemma for the Bank of England and officials will likely continue to adopt a wait-and-see approach.

The Bank of England will publish the minutes from the August policy setting meeting this morning, after officials left interest rates on hold at a record low again this month. The UK economy is expected to expand 1.2% this year, compared with a projected 3.4% in Germany and 1.8% in the U.S. It will be interesting to see if the minutes reveal that policy makers discussed the prospect of adding to bond purchases this month and speculation would tend to weaken the Pound.

The Pound initially found support on dips towards 1.6320 against the U.S Dollar and peaked around 1.6470. The latest employment data will also be released this morning and will probably show the claimant count increased again last month, while the jobless rate remained unchanged at 7.7%. UK average earnings for the three months through June are also expected to remain the same at 2.3% from the first quarter.


The Euro weakened against the majority of the 16 most actively traded currencies yesterday, after leaders in Germany and France met and rejected the issuance of bonds by the Euro-zone to contain the sovereign debt crisis. The French President Nicolas Sarkozy said France and Germany are working on "ambitious" joint plans to defend the Euro.

The Euro declined following the comments, slipping 0.4% against the Dollar, after peaking at 1.4477, the highest level since July 27th. The Swiss Franc weakened again as the SNB look to implement further measures to quell the currency's advance. The Franc declined against the Dollar and the Euro, after U.S industrial production climbed, reducing the appeal of the Franc as a safe haven.

The Euro-zone economic data was weaker-than-expected, as gross domestic product expanded just 0.2% in the second quarter, despite initial estimates of 0.5%. The U.S housing data was close to market expectations with starts dropping marginally for July. Credit ratings agency Fitch affirmed its AAA rating for the U.S and also maintained a stable outlook, which is in stark contrast to Standard & Poor's.