select
|

What collaterals could banks find acceptable for bond applicants?

Mike van Alphen, National Manager of Rawson Finance, is currently involved in a research exercise to establish what collaterals, if any, the South African banks might accept from mortgage bond applicants.




The good news, he says, is that the banks are proving to be exceptionally helpful and surprisingly flexible in their approach to this tricky subject.


"The primary rule surrounding bond grants includes the fact that the applicant's income/cash flow must be sufficient - and sufficiently secure - to cover the monthly bond repayments.


However, grey area considerations such as: the applicant's health, age or job security can make the banks hold back on the granting of 100% bonds and have repeatedly done so to date. The bank's credit lending policy also plays a big part in restricting the granting of 100% bonds.


"We at Rawson Finance would like to see a partial return to the old system, whereby assets, such as insurance policies, paid up property or other investments can be ceded as collateral in addition to the bonded property - thus giving the banks the security that the National Credit Act insists they must get and a certain amount of comfort when granting a higher than normal loan to value mortgage.


Van Alphen said that in South Africa there has long been a healthy tradition whereby friends and relatives assist home buyers (usually those younger than themselves) to get bonds by offering to assist with the additional security which may be used as collateral.


"In some people's minds there is a suspicion that such collaterals are not foolproof, but, with a background of 44 years in banking and mortgage bonds, I can assure doubters that collaterals do work exceptionally well - and in my experience very seldom actually have to be called up."




  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 18 Jun 2018
      Many home sellers are motivated to appoint estate agents because they know that the agency will carry the costs of advertising and marketing their property.
    • 18 Jun 2018
      When a property is sold when it has a tenant in occupation, the questions often raised are: “What happens to the tenant if the landlord sells the property?”, and what rights the tenant will have with regards to cancelling the lease or enforcing it, says Sunell Afrika, rentals manager for SAProperty.com.
    • 18 Jun 2018
      Sellers are often caught off-guard by the expenses incurred in the selling of a property. Just like there is no such thing as a free lunch, there is also no such thing as selling your property without incurring at least some costs.
    • 15 Jun 2018
      The second quarter of 2018 has proven to be the turning point for Midrand’s real estate market, especially the upper end which started to waver towards the end of a tumultuous 2017 with a notable drop in both sales and average selling prices.
    • 15 Jun 2018
      According to data recently released by FNB, the average age of a South African home buyer has increased from 38 to 44 this year. In an attempt to help first-time buyers enter the market sooner, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, walks us through the steps of saving for your first home.
    • 15 Jun 2018
      Putting your house on the market can be a stressful process. There are so many decisions to make that will impact how quickly your house is sold and for how much you can sell it for. It’s a serious money game where you can’t afford to make the wrong decision.
    • 14 Jun 2018
      The word tourist describes someone who is visiting South Africa for a limited time and is probably not going to buy a property here – so why is the tourism industry so important to the real estate sector?
    • 14 Jun 2018
      Serengeti Estates has entrenched its status as one of Johannesburg’s most desirable addresses for a spectrum of homeowners with its launch of The Signature Residences, a new cluster village.
        
    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