A mortgage is a home loan traditionally referred to as a bond where the immovable property being bought is used as collateral. The mortgage is repaid with interest included over a specified length of time usually 20 years, but it can be from 5 years to 30 years. A mortgage is obtained when the Buyer is unable to purchase the property in cash.

The Right Mortgage Professional

 

We can recommend a reputable mortgage professional and help you navigate the process.

 

There are a number of questions you should ask when you are looking at getting a mortgage:

  • What costs are involved
  • What type of mortgages can I qualify for
  • What types of interest rates are available for different types of mortgages
  • Can I lock in an interest rate, and what will it cost me to do that?
  • What are the closing costs, can these costs be wrapped into the mortgage
  • How much cash will I have to bring to closing
  • How long will it take to process my loan
  • Are there special programs I might be eligible for?
  • Could I get references of customers you’ve worked with the last two years

Getting approved for a home loan before looking for property is a smart move that will make purchasing property easier and quicker. This will help you know what type of property you can afford to buy based on how much can be lent to you.

 

Required Documentation For Preapproval

  • Proof of income (at least 3 months bank statement or salary advice)
  • A certified Copy of your ID or passport (in the case of the bank they will require your ID card/book)
  • A copy of the signed purchase agreement
  • Proof of residential address

 

In order to qualify for a mortgage you have to be over  21 years of age,
have been employed permanently for a minimum of 6 months,
have no judgments or defaults on your credit profile, earn above the minimum salary requirement as set out by your chosen Bank or Lender.

How Much Can You Afford

Knowing how much you an afford is a very important first step when purchasing property. A good way to figure out how much you can afford is to use the 28/36 rule.  The 28 implies that not more than 28% of your gross (before tax) monthly household income should go towards property costs, interest and insurance included. And the 36 implies the loan shouldn’t exceed 36% of your gross income. Consider how car, credit card payments etc. can affect how much you can afford.

 

Deposit For Property

Deposits for property can range from 5 to 20% of the purchase price. This information can be obtained from the Seller.

Types Of Mortgages (Bonds)

  • Fixed Rate Bonds – the lender agrees to grant a bond at a set rate for a certain period of time. This option can be useful for clients seeking to know exactly what they have to pay each month with no fluctuations.
  • Variable Rate (Prime) – The lender grants the bond at their normal lending rate. It can increase and decrease as their lending rates alter.
  • Prime Minus – The lender agrees to grant the bond at a discount to their normal lending rate.

 

Classifications of Bonds

  • Commercial Bonds – for example the purchase of an office or commercial premises.
  • Residential Bonds – for domestic properties.
  • Semi–Commercial Bonds – this would include property that has a commercial and residential element to it such as a guesthouse.