Credit Decision for Self Employed People

So what do banks look at when offering a home loan - firstly it is your repayment ability especially the financial position and strength of balance sheet, asset base of the business and the individual and of course the equity.

The there are the actual needs or amount required and providing the bank with the purpose of funds for a home, Holiday house etc.

Credit managers want to know everything about the business income focus being on how income is generated by client and the source of the income and sustainability thereof.

Minimum documents needed are - The latest 2 year signed comparative financial statements. - Signed and dated statement of personal assets and liabilities - Latest 3 months personal & business bank statements. - Where latest financial statements are not available, the latest set of management accounts required. - Kredit inform and ITC or Experien credit checks will be done on company and individuals and the business documents are required to confirm all principles & interest holding.

This is the same for all banks with slight variations whether you go to ABSA, Std Bank, FNB or Nedbank.

CREDIT REPORTS FOR TENANT SCREENING

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

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.

I Need to finance a new home and get more to pay my Debts?

I am afraid I do not have a positive result as you expected, however I do have a solution for you.  As you will see we look at all forms of finding a solution for you and there are often more than one option and I would like to explore everything for you.


So my first approach was with an external private lending company whose calculator model produced the below results which gives me a very clear indication as a starter of where things are: - Not attached but it means NO GO they do not want to carry the risk.

We call this the ASSISTANT LOAN and it is important to know that when you apply here this is not the cheapest loan at a rate of 17.5% but it is a decent offer in the debt consolidation approach and often the quickest to get all situations on the road and the idea here is to simply get the funds to kill the credit cards etc and this loan is usually taken and after a year they then assist you back into the big banks fold via a standard mortgage.

Unfortunately, this type of loan criteria is not met as the value of the property vs the loan vs the income needs to make up a minimum of R 150,000 in their loan book before they take on the risk. So I attach this for you just for your records. Use it or lose it!

PROPERTY VALUE - This Lightstone valuation I sent you is what some of the banks use especially FNB, the others usually send out a valuer. So we can assume a value of between Lightstone (R 700,000) and your recent one of R 1,500,000.00.


FNB - I agree FNB will decline, they have the loans from you, they know your risk and they have their internal risk ratings as well, you are highly exposed to them and my suggestion is that even though they are an awesome bank, let’s forget about them for now until things are sorted out

SWITCHING to ANOTHER BANK - Not an easy option especially with the lending banks being as cautious as they are now. Also when the banks switch they will normally only offer a maximum of 80% of the value they find. So if we assume a value of R 1,5 m then we can expect an offer of R 1,200,000 and this is what you owe as it is, plus there are some costs and expenses in switching – so close this avenue for now.


Buying a NEW HOUSE - OK, attached is a copy of your credit report and as you are aware there are some issue here that will prevent a new loan. Whether you use us, a bank or another mortgage originator or bond originator it remains the same as we all work through the same credit management at the banks. Whether it is standard bank, FNB, ABSA, Nedbank.
Even with these been settled, they are still on the credit reports and they are bank adverse’(FNB) – so that closes the door almost 100% - this scares the banks more than anything.  This includes getting personal loans (However i could be wrong, but this defeats the purpose as these are expensive.


You have to make arrangements to get these removed and I would speak with Transunion ITC on 0122 2146000 and Experien on 011 7993400 find out how to get these removed. So this closes this door as well until this is cleared up.


THE WAY FORWARD: -
1. I see you were paid a bonus – use this to kill some of your credit cards today, tear them up and move forward. They will and do cripple you financially no matter what you do. The credit card interest rates are prohibitive.


2. If this is not possible then you need to: Kill one of the cards off immediately or over the next month or so and close it forever.


3. Increase your bond payments by R 200 pm and after 2 months ask FNB to extend your bond from 20 to 30 years and ask for a better rate.


In three months time then you can look at this again, but right now you need to address your credit record first and that will take at least a month or so. Then I suggest we re look at this. I wish I could have been more helpful but unfortunately in this credit climate lending is tight and any form of credit risk scares the lenders 100%

I am thinking of you!!!!!

Cleaning up your credit record

When working in the Home Loan business and seeing how people fall into debt you enter into a world were people are drowning and we are constantly in a field that needs advise. Don't wait until its too late to sort out a potential debt problem. Do a credit check. Clean up your credit record. Its not something to be ashamed of, but it is something that should be managed sooner, rather than later, when the pressures have reached insurmountable proportions.

By negotiating lower interest rates and waived late fees, you can often arrange more affordable payments and shorter payoff periods. You can also consolidate your debts into one convenient monthly deposit that will disburse directly to your creditors.

Once you acknowledge your debt and get your payment plan into place, its amazing how quickly your stress levels drop. Your creditors are more likely to be understanding and accept that they will be paid, and the pressure on you is reduced to manageable proportions.

Labeling the cause of your debt overcomes the hurdle of denial and sets the course clear to financial rehabilitation.

Few things in life cause more tension than a debt crisis. Do not tackle this alone. Ask those closest to you to help see you through this difficult time.

Can you deal with bad debt?

If you need a debt counselor use a reputable organisation and check what it is going to cost before you sign up, and in many instances your bank can help you.

If It's All About Credit - Clear Your Credit Record!

It's ALL about credit!

It's ALL about credit!

It's ALL about credit!


We know this, so why aren't we doing anything about it?
Why are the number of declines with regards to submissions for credit applications increasing every month? WE DON'T LOOK AFTER OUR CREDIT PROFILES!

Times are a little rough and with the Credit Act taking total control of any credit applications, whether it be home loans, credit cards or vehicle finance, financial institutions are having to abide by their rules. So people, lets get with the program and abide by the rules! There's nothing worse than finding the house of your dreams only to find out that you can't get a home loan because you haven't bothered making a little bit of an effort.

So what you need to do to ensure FINANCIAL SUCCESS?

1. Check Your Credit Record - Click here for your ITC & Experian credit check
2. Check for judgments & credit listings
3. Contact the companies/people who have listed you and arrange to remove them
1. Often listings are old because the bureaus just forget to remove you
2. Often listings are old because the companies you listed you haven't bothered contacting the bureaus to have to removed
4. If you pay off outstanding debts, make sure you keep proof of payment (this will be required by financial institutions from time to time

It's easy and it really doesn't take much time.

Things to remember which will assist you in keeping track of your credit records. The banks have systems that link into the bureaus which show you credit profiles for clients. Credit profiles allow the bureaus to link into all financial institutions that offer credit eg Edgars Accounts or Credit Cards;

• Don't pay your accounts late
• Don't miss payments
• Don't let debit orders go off your accounts without having funds available

Well that's that for now and I hope this helps you all. Truth is you want a clean credit profile and so do we :)

Keeping SA Credit Clean!!!
HAVE A SUPER WEEK!

Manage Your Debt Responsibly

Hello all... So good to see that people are still reading the SA Property BLOG, and we're proud to say that it's now the number 1 portal and information station for all South African property and finance related information.

Seen as the only ongoing and exciting news in the world of property right now is the national credit act I though we'd put together a little list on how to manage your debt responsibly. We get endless phone calls and email from people asking us about credit issues that they have, and personal loan debts and it's quite sad to see that so many people are in the financial dilemma's that they're in...

So once again in an effort to help South Africa become and debt free society here's the TOP 10 yes TOP 10 debt management tips and hints that help people Manage Their Debt Responsibly.

• Avoid Making Impulse Purchases - If you don't have the extra cash to blow, avoiding blowing it. Instant gratification is all fine and well but it ain't that great when that bill arrives and you realise you can't afford it


• Speak to your creditors - When you're in financial SHIT, speak to your creditors, tell them the predicament you are in and come to a mutual agreement and understanding, even if it means dropping your monthly payments. Missing payments will affect your credit ratings.


• Get credit only from Registered Credit Providers - Stay away from loan sharks unless they are registered.


• Always make your monthly repayments by your due date - NEVER MISS EDGARS ACCOUNT REPAYMENTS. These guys will list you in 2 ticks...


• Pay off your credit - Any extra money that you have at the end of the month, use to pay of your credit. If you have, put this cash into your bond account. At 13.5% interest you won't get better rates anywhere else.


• Kill your small account first - Alot of people say kill the loan with the highest interest rates first (normally your bond account) but I'd suggest killing the smaller ones quickly, thus reducing the amount of accounts to pay off.


• Moving Debt - Don't move short term debt to long term debt to increase your monthly cash flow, your interest rates will increase


• Don't stand surety for anything unless you can handle it - This is a killer. People sign surety for other people without realising that they become responsible for repayments should the other person for whatever reason not be able to pay. WATCH OUT!


• Live within your means - Don't over commit.


• Know your credit ratings - Check yourself out at least once a year. You can get a free credit check on your birthday from the credit bureaus. Otherwise Wizard can get you credit checks for a price of R125.00. See Credit Checks for more information

For a DEBT FREE SOUTH AFRICA!

WizardMan Out!