CUSTOMERS STORY
I appreciate only too well that banks are not
in a position to assess the future performance
of a business. However, in many cases the
entrepreneur who is prevented from getting a
bond on account of a fluctuating income stream is
also the person who has built up a big asset base.
But despite the favourable lending environment, impaired credit
records, poor account conduct, insufficient cash flow and unsatisfactory
credit scorecards continue to stymie many first-time homebuyers’
efforts at securing funding and breaking out of the rental market. The
National Credit Regulator (NCR) has revealed that in the last year,
no less than 394.4 million credit record enquiries were made to assess
potential borrowers’ credit worthiness, a year-on-year increase of 27.1%.
According to the NCR, the number of creditors in good standing in
the last quarter decreased by 76 000 to 10.5 million, while the number
of consumers with impaired records rose by 189 000 to 9.53 million,
representing 47.5% of all South Africa’s credit active consumers. Many
of these consumers are oblivious to their credit standing and have only
a vague idea of how to go about dealing with credit bureaux and
accessing reports.
Mickey Singh, a self-employed father of one was recently left
gnawing on his lip after being rejected out of hand several times
in his quest to obtain a home loan. Singh, whose construction
business has been running for two years, was also taken aback
by the attitude of his consultant and urges greater investment in
developing point-of-contact relationships as well as the reduction
of mortgage-processing fees, which he slates as “exorbitant and
unnecessary”.
‘It was traumatic to say the least. To have had to present my case
over and over again in front of a snooty consultant who seemed to
think she was doing us a favour instead of doing her job, and with
the added stress of having a baby on the way, wasn’t an experience
I’d like to go through again,’ said the 35-year-old roof technician,
whose application for financing was eventually approved.
‘It wasn’t as if I had a bad credit record – it’s just that my
business is still developing and is considered a risk.
‘It just doesn’t make sense to me. They wouldn’t even accept
the assets I had built up as security. There is also a dense wall of
technical information for bond applicants to try and penetrate – it
would be so much easier if this was presented in simple, everyday
language,’ he adds.
Singh’s views are echoed by Mike van Alphen, National Manager
of the Rawson Property Group’s bond origination division, Rawson
Finance, who maintains that an urgent restructuring of the bondaward process is needed to prevent discrimination against many
classes of potential property investors, including pensioners and
entrepreneurs.
‘Even if the older person takes out life insurance ceded to the
bank, any person aged over 60 is likely to have difficulty in getting
a normal 20-year bond. The banks like to insist that such bonds be
geared so as to be f ձ