select
|

A good credit record is worth cultivating

That’s the advice of Young Carr, CEO of the Aida property group, who notes: “Most homebuyers need home loans, but what many don’t appreciate is that the process of obtaining this credit actually needs to begin years in advance of the decision to buy property.

“The first thing banks will do on receiving a home loan application is to check on the prospective borrower’s credit history, which means that good management of monthly bills, including any clothing or furniture accounts and credit card payments, is critical even for young people who have no immediate plans to buy a home.”

It is also important for future buyers to open a savings or cheque account in their own name, to keep it balanced and not to overrun credit limits. “And a history of full payment on time for a major purchase, say a car, will be a great recommendation for any mortgage applicant,” he says.

“Getting an early start on building a good credit record in this way also means that if there are any minor misjudgements early in a working career, they will most probably be outweighed by a longer period of good credit management when the time does come to buy a home.”

Carr says it is particularly important for those who are working on their credit records to pay attention to the “due dates” on their bills. “For credit reporting purposes, overdue accounts are usually anything unpaid for longer than 30 days. So if the due date is the 1st of the month, say, the debtor must make sure that his payment will actually reach the creditor on or before the 1st – and inside the 30-day window. The advent of electronic banking has of course made this much easier to manage.”

It is also important for potential borrowers to pay attention to the implications of the National Credit Act, which provides that lenders must ensure, before they grant any new credit, that borrowers will not be committing too much of their income to debt repayment.

“They do this by compiling a complete debt profile including all other repayments the consumer has to make as well as regular monthly expenditure on such items as transport, food and school fees before they can approve a home loan.  
“However, it must be said that this is not the only good reason to keep the total of your monthly debt repayment obligations as low as possible. The other is that doing so will also give you plenty of leeway to cope with any future interest rate increases without financial hardship, whether you are a homeowner by then or not.”




  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Nov 2017
      Demand for secure estate living in Hout Bay has risen sharply in recent years, precipitating a spike in development with estate homes now accounting for 20.24% of the property landscape with the launch of an exclusive new gated development on 26 November adding 20 more units to the existing 1250 estate homes.
    • 24 Nov 2017
      There are some things that money can’t buy – spectacular views from Mouille Point to the V&A Waterfront and a trendy and lively neighbourhood that encapsulates the very best of the Cape Town lifestyle.
    • 24 Nov 2017
      Tshwane’s four-bedroom Mayoral mansion, nestled among ambassadorial residences in the upmarket suburb of Muckleneuk, fetched R5.1 million after spirited bidding at High Street Auctions’ final sale of the year.
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK