“ 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