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Get bond advice before you set out to buy a home

A weaker rand and rising fuel prices, plus the 16% hike in electricity charges just proposed by Eskom, could easily put paid to many families’ hopes of becoming homeowners this year – unless they take steps now to counter the effects of these increases.

That’s the word from Rudi Botha, CEO of leading mortgage originator BetterBond, who notes: “Some consumers are already taking on more debt just to cope with everyday expenses such as food, rent and school fees, and it is expected that wages and salaries will only rise at about half the rate of inflation this year.

“So the big cost-of-living increases that are on the way could push already-stretched household budgets past breaking point, unless consumers start immediately to prepare for them by cutting their expenses to the bone and doing everything they can to reduce their debt load.”

And this is especially urgent for those who are anxious to become homeowners in the next year or two, he says.

“The reason is that the banks don’t only consider your income and credit record when deciding whether to approve a home loan, but also look closely at your regular monthly household expenses and your existing debt repayment commitments.

“They have to do this, in terms of the National Credit Act, to ensure that if you take on a monthly bond repayment commitment, it will not result in you being ‘over-indebted’ and ending up in financial trouble.”

Unfortunately, Botha says, the fact is that less than half of those currently keen to become homeowners are likely to obtain a home loan now if they just apply without doing some serious financial preparation first.

“This is one of many reasons to consult a mortgage originator such as BetterBond very early in the home buying process, and certainly before making any home loan application.

“Our experts know exactly what the banks require and can advise prospective borrowers – free of charge - about what they might need to do to improve their financial profile before applying for a bond.At the same time they can suggest what price-range of homes would-be buyers should target so they don’t waste time looking at properties that are too expensive.

“Then once clients are ready to buy, we can submit theirbond application to several banks at a time and negotiate the most favourable terms, which can make a significant difference to the eventual cost of their property, and their long-term financial well-being.”


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