Archive | May 2014

BetterBond’s ‘Dream Bigger, Live Better’ Lottery

Life could be a dream

BetterBond wishes to make the dreams of our loyal agents, developers, and principals come true. We have committed over R1 million to changing the lives of our supporters.

Through the BetterBond ‘Dream Bigger, Live Better’ Lottery, BetterRewards members can win their share of R100 000 every month!

We have already started changing the lives of our own staff:

  • Anthony took his whole family away on holiday.
  • Burda financed the recording, producing, and releasing a CD of her sister’s beautiful music.
  • Jennerwade helped her family and community by buying clothes for her sister’s children, and paying for a young boy’s funeral at her church.
  • Aubrey broadened his horizons, using his winning dream to go on holiday and fly in an airplane for the very first time.
  • Suraya invested in her son’s education.

Now it is your turn.

To participate, follow the steps below:

  • Make sure that you are a BetterRewards member – call us on 0115165500 or speak to your BetterBond consultant
  • Send us your OTPs and registrations – the more you submit, the better your chances of winning
  • Send us your dream through one of the following mechanisms:
  1. Postcard in launch pack delivered by your BetterBond consultant
  2. Email: dream@betterbond.co.za
  3. SMS: “my dream is…” to 32015
  4. Rewards Portal: http://www.betterrewards.co.za
  5. BetterBond App – Android and Apple

Winners are selected through a random draw.

The more OTP’s and Registrations you submit, and the more dreams you send us, the better your chances of winning.

Live your dream with BetterBond today!

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Buyers need to make a move – carefully

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Prospective home buyers have been given another “breather” when it comes to applying for a home loan – but this week’s decision by the Monetary Policy Committee (MPC) to leave interest rates unchanged should not make them complacent.

That’s the word from Shaun Rademeyer, CEO of SA’s leading mortgage originator BetterBond, who says they should heed repeated warnings from Reserve Bank Governor Gill Marcus that interest rates will have to be raised in the near future to put the brakes on inflation.

“As it is, the Consumer Price Index breached the Bank’s 6% upper target in April, and the Governor noted this week that the rand was still under extreme pressure due to a lack of investor confidence in developing markets generally. This of course has a negative effect on fuel prices and we are now also entering a season of higher food prices and the annual increases in administered prices like electricity tariffs.”

Consequently, he says, those who are planning to enter the property market for the first time, and those who wish to upgrade to a more expensive property, should do so without delay, as even a 0,5% point increase in interest rates could have a negative effect on their ability to get a home loan approved.

“Every increase of course means higher monthly repayments on things like cars, furniture, credit cards and store accounts which, added to the increases in living costs will leave prospective buyers even less of the disposable income that banks are looking for now when they consider home loan applications.

“At the same time, property prices themselves are currently moving up steadily, thanks to a growing shortage of stock for sale in many popular areas, and prospective borrowers could well find that they don’t qualify for the bigger loans they need once interest rates – and monthly repayments – have gone up.”

However, Rademeyer says, now is also the time for home buyers to be extremely cautious in their choice of property. “It is absolutely essential that they allow themselves enough leeway to cope with future rate increases when they do their own affordability calculations – or even better, that they seek help from a reputable bond originator like BetterBond to get home loan pre-approval, so that they will know what their property price range is, with some leeway built in.”

Meanwhile, existing homeowners should be taking every opportunity now to pay down the capital on their home loans, he says, so that their monthly installments don’t rise too much when interest rates are increased.

Borrowers still prefer personal service to automation

househunters

In the age of high-tech everything – including online loan applications – it’s interesting to note that most home buyers and sellers still depend on estate agents, home loan consultants and conveyancers to guide them through the actual purchase process in a series of personal interactions.

This doesn’t mean that they are not increasingly aware or appreciative of the benefits of technology, such as the time they can save by house hunting online, or the speed with which home loan applications can now be processed.

“It does mean, however, that most people still prefer being able to access expert advice face-to-face before making major financial decisions,” says Shaun Rademeyer, CEO of BetterBond Home Loans, which accounts for more than 25% of all residential mortgages being registered in the Deeds Office and is SA’s leading bond origination group.

“It also suggests an increasingly relevant role for originators as the interface between potential borrowers and lenders – and especially for those who can successfully combine ‘old fashioned’ personal service with the speedy responses enabled by superior technological capabilities.”

This is illustrated, he believes, by the fact that BetterBond and other originators are experiencing a much higher rate of growth in the value of home loans they are able to get approved than the national rate of growth in mortgage lending as stated by the Reserve Bank.

“The national rate stood at an annual 2, 9% at the end of March and by contrast, our figures show that at end-March, we had achieved a 9% year-on-year increase in the total value of the loans for which we secured approvals.”

Rademeyer says the success of the originators is partly due to the fact that they are often able to ‘rescue’ applications that have been declined by borrowers’ own banks and get them approved by a different institution – “although in our experience the majority of home buyers would still prefer their lender to be the bank with which they have an existing relationship and will usually ask us to apply to this institution first”.

“However, we believe it is also due in large part to the fact that BetterBond loan consultants offer a personalised while highly convenient service to each applicant, whether they are seeking pre-approval for a bond or an actual home loan.

“Prospective borrowers tend to have a lot of questions that they want a real person to answer, and they are also not comfortable with the idea of a wholly impersonal evaluation process in which there is no recourse if an application is rejected. They want someone to motivate their individual application and submit it to multiple banks if necessary, and if they get several acceptances, they want help to choose their best loan option.”

‘Bargain’ homes can be money pits

Buying a “fixer-upper” can save you money, and possibly put you in a preferred location for a lot less than you thought. And they are definitely worth looking at because, as estate agents are always saying, it is much better to purchase the worst home in a good neighbourhood than to buy the best home in a bad area.

Renovations

However, says Shaun Rademeyer, CEO of South Africa’s biggest mortgage originator BetterBond, you need to be especially careful when you consider buying a “bargain” home, because you could easily end up having to deal with much more renovation and repair work than you thought.

“If the property is simply ‘tired’, it may take only a coat of paint, some modern fixtures and fittings and some landscaping to bring it up to the standard of the surrounding homes and increase its value.

“But run-down properties often require quite a lot more than that, and potential buyers would be well-advised to have the ‘bargain’ property they are thinking of buying thoroughly inspected by a professional before they sign an offer to purchase.”

Once you have the inspector’s report, he says, it will be much easier to be realistic about what it will really cost to renovate the home properly, and then to consult with an experienced local estate agent to work out whether this expenditure would mean overcapitalising for the area.

“Remember if the home needs any structural changes, you will need to include engineer’s and architect’s fees in your renovation budget, as well as those for the actual building, plumbing and electrical work that may be necessary.”

In addition, says Rademeyer, you would have to get plans for any alterations agreed to by the neighbours and then approved by the local authority, which is likely to take quite some time and could mean that you have to pay a lot in holding costs – the bond instalments and  rates and taxes – before you could even start renovating.

“Adding all this up, buyers usually find that it is not worth taking on a major renovation if their plan is to complete it and resell within two or three years. Generally you need to live in a renovated home for an extended period before property values in the area will rise enough to enable you to recoup both your original purchase price, and your renovation expenditure, should you wish to sell.”

First-time buyers holding on to their dreams

Fuel prices have just risen to record levels, the cost of food is set to jump, and utility charges are already sky high, so it’s getting tougher by the day for young people to buy their first home.

1st time buyer“And yet, first-time buyers still accounted for almost half (48%) of all the home loan applications we received in the past 12 months,” says Shaun Rademeyer, CEO of BetterBond Home Loans, which accounts for more than 25% of all residential mortgage bonds being registered in the Deeds Office and is South Africa’s leading mortgage origination group.

“This shows just how important home ownership still is to young South Africans, even though it often takes them a few more years to achieve than it took their parents, with the average age of first-time buyers now being 34.”

According to BetterBond’s latest statistics, the average home purchase price paid by first-time buyers rose by 7,9% in the 12 months to end-March to reach R630 000, but lenders made things somewhat easier for them by dropping the average percentage of purchase price required as a deposit from 12% to 10,6%.

By contrast, Rademeyer notes, the figures show that the overall average purchase price rose by 11,7% year-on-year to R890 000, and the overall average deposit required declined only marginally to 18,5% of the purchase price.

“Most buyers have thus had to put a significantly larger amount of cash into their home purchases in the past year and, especially in the past two months since the increase in the prime interest rate, the effect of this is starting to become evident in a slower rate of growth in the number of bond applications received each month.”

However, he says, the March statistics still show substantial year-on-year increases in both the number and value of home loan approvals, as well as a 13% year-on-year increase in BetterBond’s home loan approval rate to 77,2% of all applications received.

“We secured almost 52 000 home loan approvals with a total value of R38,1 billion in the 12 months to end-March, (compared to 49 000 approvals valued at R35 billion in the previous 12 months), and almost half of those approvals were on applications that we were able to rescue after they were initially declined.

“This highlights the fact that we are able to offer home buyers a significantly better chance of having their home loans approved by being able to motivate applications and submit them to multiple lenders.

“At the same time, however, it is encouraging to see that the banks’ initial decline ratio did show a year-on-year decline of 21% at end-March, reflecting their greater willingness to lend into the mortgage market in the past 12 months.”

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