“ It is worth your efforts in making sure that your credit profile is strong and healthy before you apply for a home loan . This will enable you to use the extra money that you would have paid as an interest repayment , to rather pay into your bond each month as an extra payment , enabling you to pay off your bond much faster ,” says Meyer De Waal from My Bond Fitness .
2Improve your credit score
The lower your credit score , the higher your risk to the bank and the higher your bond interest rate will be . This means that you need to give yourself time to rectify mistakes on your credit profile . The following factors could contribute to downgrading your credit profile and so need to be addressed :
1 Expensive debt ‒ identify and make plans to settle it
2 Late or non-payments reflected on your credit score-card ‒ get these removed
3 Paid-up judgements against your name ‒ get these removed
Other tips for managing your credit score :
• Keep your debt repayments to a maximum of 20 ‒ 30 % of your income .
• Pay your accounts on time , every month .
• Always pay the minimum instalment required on your accounts . To improve your credit standing , try and pay more than the minimum amount required from you each month .
• Close any accounts you don ’ t use , or reduce their limits . Always then notify the credit bureaus about these changes so they can update your information .
• Make alternative payment plans with credit or service providers if you can ’ t make a payment in time .
• Keep any outstanding balances on your credit card or store accounts below half of the credit limit .
3Get out of debt
If you are in over your head in and struggling to repay what you owe , it ’ s important to come up with a solid plan to work your way out of it . First , don ’ t take on any more non-essential credit if you can help it . Next , get hold of a debt counsellor who can assist you with managing your debt . They will consult your credit providers on your behalf to establish an affordable monthly payment plan , which will include both your earning and living expenses . This process
is called debt review . A key benefit from being under debt review is that it guarantees your outstanding debt will not continue to grow .
4Manage your budget
Drawing up a budget is one thing ; being able to stick to it is a completely different ball game . The good news is that there are technologies out there that already exist to help you with managing your finances better .
Old Mutual , for example , have brought out a budgeting and investing app called 22Seven to encourage more South Africans to invest , budget and save . The app can pull information from multiple bank and investment accounts to track your monthly transactions ( income , fixed expenses or day-to-day expenses ) as well as any growth or loss on savings
OTHER FIRST-TIME PROPERTY INVESTMENT FINANCING OPTIONS
As a first-time home buyer , you could qualify for a housing subsidy under a Government initiated FLISP grant . FLISP stands for a Finance Linked Individual Subsidy Plan . The Department of Human Settlements has initiated FLISP to reduce the initial home loan amount and make monthly instalments on loans more affordable .
Who can apply for FLISP assistance ?
According to FLISP . co . za , you can qualify for FLISP assistance of R20 000.00 if :
• You are a first-time residential home buyer ;
• You earn between R3 501 – R15 000 per month ;
• You have never benefitted from a housing subsidy scheme before
• Your home loan has been approved ;
• Or you have already taken transfer ( you must then apply for the assistance within 12 months of taking ownership ).
FLISP assistance of R40 000.00 is awarded to a qualifying home owner if :
• Your income R11 700.00
• You qualify for a home loan of R400 000.00
• You have never benefitted from a housing subsidy scheme before
• Your home loan has been approved ;
• Or you have already taken transfer ( you must then apply for the assistance within 12 months of taking ownership ).
22 MARCH 2017 SA Real Estate Investor www . reimag . co . za