How to help ‘rebound’ buyers

Rebound buyers

Five years on from the ‘Great Recession’ and many of those who lost their homes because they were unable to pay their homeloan instalments, are ready to buy again before property prices rise too much, or interest rates start climbing.

And many of these ‘rebound’ buyers are highly motivated and a pleasure for agents to work with, because they’ve already experienced the benefits of owning a home rather than renting – or having to share accommodation with parents or siblings.

However, they may not find it all plain sailing, and estate agents who would like to sell them their next home need to be prepared to help them through what may be quite a long process.

The first thing rebound buyers need to do is make a definite plan. They tend to assume they’re ready, even when they still have issues that need to be addressed, but an experienced agent can help them work out exactly what steps they need to take to be able to buy again and how long these will probably take.

Next, rebound buyers must ensure they have fully repaired their credit records. Those whose only impairment was the default on their mortgage will probably be able to do this more easily than those whose history is littered with other late or missed payments and debt judgments. But everyone needs to make sure their house is in order before they even think of applying for a new homeloan.

Old debts and judgments need to be paid off and cleared from their credit history, and a couple of years of bills being paid in full and on time would help enormously.  In fact, they should do their best to completely pay off any other debt – like credit card balances, car finance or personal loans – or lower it significantly, because lenders can’t approve a loan if the borrower’s debt-to-income ratio exceeds the National Credit Act guidelines.

Rebound buyers also need to be prepared to pay a substantial deposit.  This may come as a surprise to those who bought their previous homes in the days when the lenders were happy to grant 100% mortgages, but times have changed, and they should not feel as if they are being singled out because of their previous problems. They need to know that the majority of buyers are now expected to have some equity in their homes right from the start, and paying a deposit does make monthly bond repayments more manageable.

In addition, rebound buyers should get a homeloan preapproval from BetterBond before they go house hunting, so that they – and any agents they work with – know what their home price limit is, and no one wastes time looking at properties they can’t afford.


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About BetterLife Home Loans

Since 2003 BetterLife Home Loans has been SA’s No.1 Bond Originator, handling the entire home loan application process on your behalf – free of charge! Our aim is still to source the best interest rate for you by submitting your home loan application to all the major banks. There is no easier way to apply for a Bond or Home Loan in South Africa!

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