01/05/2021
Most South Africans aspire to own a home🏡, but are still under the misperception that they are unable to qualify for a bond.
But most of you can qualify‼️
The five consecutive repo rate cuts of last year resulted in a massive shift in affordability.
With the prime lending rate dropping to a record low of 7%, home buyers are now able to afford 30% more than they were at the start of 2020, when the prime lending was at 10%. Now is actually the most opportune time for aspirant buyers to apply for a bond.
A buyer would need to earn about R26 000 to qualify for a bond to buy a home of just over R1 million, if the bank offered a bond at the prime lending rate of 7%. The monthly installments would be about R7 800. Last year, when the interest rate was at 10%, someone with the same salary would only have been able to afford a home of just over R800 000.
Aspirant property buyers should check their credit score and financial records so that they know how much they can afford.
(Baruk Property Developments use Better Bond for all pre approvals)
Those with the means to invest in property should make the most of the current lending environment. Not only will they acquire an asset that has proven its resilience in challenging economic times, but they will have access to the funds in their bond, should they need it in the future. In this way, paying off a bond is much like a forced savings account, with a competitive interest rate.
The credit bureaus specifically look at the following factors when calculating your credit record:
➖Your debt repayment history
➖Amounts owed
➖Types of credit applied for and how often
➖Length of time your accounts have been open
➖How much of your available credit you are using
➖Default history where you have not honoured a debt obligation that resulted in a judgement against you
Knowing what you can afford, and how to apply for a bond, will go a long way to changing the perception that homeownership is unaffordable.
“With the current low interest rate, now is the ideal time to make the switch from tenant to homeowner or property investor.”
