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The Igniting Dreams Initiative

What is The Igniting Dreams Initiative?

BetterLife Home Loans believes in making dreams come true and in the process changing the lives of others. Through The Igniting Dreams Initiative, we want to encourage everyone to submit their dreams for change – whether it is for yourself, an individual, a community or charity in need. Enter your dream and help us to change lives!

Why did we create The Igniting Dreams Initiative?

Our vision is to build a world-class home services business by making the home journey an amazing experience. Not only do we aim to change our customers’ lives for the better, but we also want to make their dreams come true. We want to inspire through awesome service. We want to proudly live our brand, and strive to make a difference, every day!

Candice Dexter from BetterLife Home Loans explains what our bond originators do for you

In today’s economic climate, obtaining a home loan can be a difficult and time-consuming exercise. But with over 15 years of experience in bond origination, and a team of home loan application experts, BetterLife Home Loans provides you with a better, easier way to finance your dream home.

We handle your home loan application – let us work with South Africa’s largest banks for you and we will not only assist you with successfully attaining a home loan, but will also help you secure the best possible deal. We know exactly what information is required by each bank to make a successful application, and we’ll do it all at no cost to you!

Home loan options for different age buyers

Different stages of life require different approaches when it comes to obtaining a home loan. For example, first-time buyers often have good incomes but a shortage of cash and retirees often have enough cash or equity for a large deposit but reduced incomes.

“However, no matter which generation you belong to, working with an experienced and reputable mortgage originator is your best strategy for getting the loan that fits your personal circumstances best,” says Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s biggest mortgage originator.

“We understand, for example, that millennial homebuyers probably haven’t been in the workforce that long, so cash is often the primary consideration for them.

“Of course a 20% deposit would mean that you’d have lower monthly bond repayments, but even if you haven’t managed to save that much yet, we can still help you to reap the benefits of home ownership.

You will need:

– Stable employment
– A clean credit record
– You will have to be able to afford the monthly repayments on your loan comfortably.

Once you have everything ready, you should be able to get a loan with a deposit between 7% and 8%, which is the average paid by our first-time buyers over the past 12 months.”

At the moment, he notes, the BetterLife Home Loans statistics show that the average purchase price for first time buyers is around R680 000, so an 8% deposit would be R54 400.

“This would give you a monthly repayment of about R6250 on a 20-year bond at the current prime interest rate of 10,5% – while the monthly repayment with a 20% deposit would be around R5450.”

Rademeyer says that for Generation X buyers, many of whom are putting children through school and caring for their parents while also trying to save for their own retirement, lower monthly costs are very important. This means that they should aim to put down the biggest deposit possible when taking out a new home loan.

“And if they are repeat buyers, they may well have built up some equity in their existing home that will help them to do so – and might even enable them to secure a loan at a better interest rate, which would reduce their monthly instalments even further.”

Meanwhile, he says, for baby boomers that are either retired or about to retire, living on less income is often their concern.

“And if you’re a baby boomer with lots of equity in your home but less income-generating savings than you hoped for, one option to discuss with your mortgage adviser is selling your home in order to downscale to a smaller, cheaper house or apartment and get cash back to put into your retirement savings.

“In this case you would probably want only a very small mortgage and should also look at paying the biggest deposit possible. In addition, you should ask your adviser to help you get pre-qualified in order to see what sort of loan you can get on your retirement income.”

It is also worth noting, Rademeyer says, that like any other investment plan, a home-buying plan always proves more effective if you start young, because your home equity grows as you pay off your loan and your home appreciates in value.

“The best outcome is if it is fully paid off by the time you want to retire, so that you can live there rent free or use the proceeds to buy a smaller home for cash and still have some money left over to add to your retirement savings.”

Securing your home loan: Dot those I’s and cross those T’s

You’ve found the home of your dreams and your offer has been accepted – now all you need to finalise the purchase, is an answer on your home loan application. You’ve already assembled a ton of paperwork for the application, from payslips to employment letters, bank statements, tax returns and expenditure declarations, so you’re pretty confident that the final answer will be “yes”.

But things don’t always work out the way you expect, says Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s biggest mortgage bond originator. “Even if your credit record is great, you can still be turned down for a loan because of inconsistencies or gaps in your documentation.” For example, you may have forgotten to mention that part of your stated income is derived from a second job. Or if you are buying the property with someone else, it may have slipped your mind to detail their monthly expenses.

Why this is a problem

This may seem trivial to you, says Rademeyer, especially if you believe that you will have no trouble making the monthly home loan repayments. It is also much less likely to happen if you apply for your loan through a mortgage originator such as BetterLife Home Loans, which has experienced loan officers to advise you upfront about what the different banks may require when assessing home loan applications, as well as about what further legwork may be required.

“However, aside from assessing the risk in each loan, lenders also have to apply very strict rules to ensure that you will not become over-indebted if they grant you a bond, and therefore they are entitled to double check anything that raises the smallest red flag”, explains Rademeyer. “At that stage they will most likely also ask for more documentation or evidence that will enable them to decide if you will manage the instalments or not. Our advice to prospective borrowers is just to co-operate and try to provide whatever additional paperwork is requested, whether it is more bank statements, proof of the source of your deposit, or detailed financial statements if you are self-employed”, he advises.

The bottom line

According to Rademeyer, the lender would not be asking for additional information unless it was necessary to complete the approval process. “The banks are relatively keen to approve new home loans at the moment, but a quick denial will nevertheless be forthcoming if you get hot under the collar, refuse to provide what they have asked for and insist that they evaluate your application using what you have already provided”, he says. “Basically, you are asking for someone to lend you money to buy your home, and you need to be prepared to dot the I’s and cross the T’s until they are convinced that this is a good idea.”

There are processes in place that ensure that home loans are only granted to people who are in fact are in a position to bear the financial burden – this is done to protect both the lenders as well as the applicants. Therefore, it’s important to remind yourself that the banks won’t ask for anything that isn’t absolutely crucial to getting your home loan approved in the long-run, so you should be prepared to jump through as many hoops as it takes.

Want a home loan? An originator can double your chances of approval.

Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s biggest mortgage originator, notes more than half (52%) of the home loan approvals currently being achieved are the result of an application being “rescued” by a reputable originator after being turned down by at least one financial institution.

“And on top of that, a quarter of all applications are being declined outright by all the banks, which means that the chances of a loan being approved without help from an originator are now well under 40%, compared to our 75% approval rate.”

Meanwhile, higher interest rates are finally beginning to have an impact on housing demand, with the overall number of home loan applications showing a 5% drop in the 12 months to end-April, with the overall value of home loan approvals having fallen by almost 4% over the same period.

“Most of this decline has occurred in the past three months, as the January and March rate increases started to affect household budgets. This is especially evident in the first-time buyer sector, which tends to be more credit-dependent than the repeat buyer sector.”

With debt repayments up across the board, Rademeyer notes that the 20 to 35-year-old buyers who make up most of this sector are finding it extremely hard to save for a deposit on a home, with the average deposit required by a first-time buyer now being around R83 000 – or almost 9% more than at this time last year.

“At the same time, the banks are becoming more cautious about lending into this sector, with the result that first-time buyers currently account for just 29% of all home loan approvals, and 23% of the value of those approvals.”

What this means is that repeat buyers are currently the dominant force in the market – although even in this sector, consumers are clearly trying to contain their monthly expenditure, as evidenced by the rising number of repeat buyers who are intent on downsizing to smaller, more manageable homes with lower operating costs.

“However, we must note that these smaller homes are not necessarily cheaper homes. In fact, our statistics* show that the average home purchase price has risen just over 10,5% in the past three years during which the downsizing trend has been clearly evident.

“Even more interesting is the fact that over the same period, the average cash deposit amount paid has risen by almost 14%, which would seem to indicate that repeat buyers are not only intent on lowering their monthly home running costs such as property rates, utilities and maintenance, but encouragingly, also keen to keep a lid on their monthly home loan instalments by paying bigger deposits upfront.

“This is a prudent measure that also helps to protect buyers against financial shocks, and bodes well for the stability of the SA market which will most likely have to weather several more interest rate increases over the next 12 to 18 months.”

*The BetterLife Home Loans statistics represent 25% of all residential mortgage bonds being registered in the Deeds Office.

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How to market yourself as an estate agent in the digital world

Technology has changed the face of many industries, the way they operate and how their customers respond. It’s daunting when faced with promoting yourself online, but technology isn’t going away. Therefore, we devised a few tips to ensure you’re properly marketed online to promote your business and attract potential clients.

Tailor your online profile to your target audience

The first step is to craft a mission statement for yourself that communicates who you are, what you offer and how you offer it. Ensure that your potential clients know the following when they look at your profile including where you’re based, what services you offer and what to expect before and after acquiring a home loan.

Network with like-minded people

LinkedIn is the ideal way to create a profile that gives people a good idea of who you are and what you offer. You can connect with potential clients and other industry minds as well as follow well-known brands and interests. You can post articles, share content and see what the latest trends are in your industry. By making yourself an active social networker, you can promote yourself and your business.

Nominate yourself to write for your company online

A great way to market yourself is to become a “captain of your industry.” In addition to offering clients services offline, you can dispense industry advice and tips through relevant content by writing articles, uploading helpful videos or creating infographics. Many companies have blogs (like this one), that are integral in marketing services and building legitimacy as a brand. Great pieces of content that are shareable and entertaining are key to building your reputation as an estate agent.

Build client relationships

Because online is slightly less personal than seeing clients physically in an office, it’s imperative to offer something more than an information consultant. Insurance agent, Ryan Hanley, states that it’s important in the days of the internet, to build solid relationships with clients to ensure a “quality agent/client bond.”

He says that while millennials are a digital generation, they too, want a relationship with their service providers, albeit one that starts online. Hanley warns against relying on self-service quoting platforms and calculators. To build a relationship, ensure you educate clients and provide after service help.

In conclusion, your digital presence should be a reflection of who you are as an agent. A special tip is to clean up your online profiles to make sure they’re professional and your business is properly represented.

Don’t spend too much while waiting for your new home

Buying a new home off-plan is a pretty common occurrence in today’s property market, but it can mean a long wait between the time that the buyer’s home loan application is approved, and the time when the loan is formally granted and becomes active – and this can pose a real risk for the unwary. Shaun Rademeyer, CEO of SA’s biggest mortgage originator, BetterLife Home Loans, says the sense of relief and excitement that comes with a home loan being approved can easily lead to some unwise financial choices, especially among first-time buyers.

Be smart with your purchasing decisions

“For example, it is natural to want to move into your new home with new curtains, furniture and appliances, but the latest smart-fridge might not be the best choice at this stage because you need to think twice before taking on any more debt to finance your purchases”, advises Rademeyer.

He says that a chunk out of your savings or a dramatic climb in credit or store card debt during the waiting period can seriously affect your credit score, and could cause your bank to rethink the terms of your home loan. The bank may even withdraw approval altogether if it believes you will no longer be able to afford the repayments.

“Our advice is that borrowers should in fact avoid taking on new credit of any kind at this stage and should especially put off buying anything like a new car or a luxury lounge suite”, says Rademeyer.

Put off changing jobs

During the waiting period, it’s also better for borrowers if they can avoid or delay changing jobs. “Career changes can also have an effect on a loan approval, even if they are not negative. You may be offered a better job or a position with bigger bonuses, but lenders are generally looking for stability in your earnings and employment, and will need to be notified if you decide to make a change while waiting for your new home to be completed”, explains Rademeyer.

Communication is golden

Indeed, he says, communication is the key to building a good relationship between borrower and lender. “Loan approval can come completely undone as a result of reckless spending or sudden changes that affect the homebuyer’s financial profile. This could lead to serious problems with the home builder and damage the buyer’s credit record for many years”, continues Rademeyer.

“Therefore the safest course is for the homebuyer to change as little as possible between the time a loan is approved and the completion of the new home. Steady employment and spending habits will pay off when the full financial implications of being a homeowner become known.”

Don’t rush to pack up

And finally, says Rademeyer, you shouldn’t be too hasty when packing up your existing home. “You may well need all those bank statements, tax returns and payslips again when your new home is finished and the time comes to finalise your home loan and book the moving van.”

Over spending and a change in employment can affect the home loan approval process, so once you’ve applied, rather sit tight and wait to be given the go-ahead before you consider making any other large purchases.

Reduce your bond faster with lump-sum deposits

It has become common knowledge among homeowners that paying a little extra off your home loan every month can dramatically reduce the term of the loan and can also result in big savings on interest. However, according to Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s biggest mortgage originator, people should not be misled into believing that paying their monthly bond instalment in two halves – one at the start of the month and one in the middle – will have the same effect.

“There is actually no advantage to breaking up your home loan repayment like this, unless you actually deposit half a repayment every two weeks – which would of course then equate to 26 half-payments a year – or 13 full monthly payments instead of 12”, he says.

The best way to pay an additional monthly instalment

If you’re going to pay an additional monthly instalment each year, there is a much easier way to do so. “Just save the money until a full extra months’ payment can be made and then deposit it once, with the instruction that it is to be used to reduce the capital portion of the loan”, says Rademeyer. “What’s more, you will actually save more interest by doing this instead of paying off a little extra each month. For example, on a R1m home loan at the current prime rate of 10.25%, one additional month’s repayment of R9800 made annually will cut 50 months off the 20-year repayment term and save you about R341 000 in interest”, he explains. “A monthly additional payment of one-twelfth of this (or R817) will cut the repayment term by 48 months and generate interest savings of about R323 000.”

Rademeyer says this is why those who are lucky enough to receive a 13th cheque each year are always advised to put as much of it as possible towards an additional bond repayment.

Even smaller additional amounts can help

“However, it is easier for most people to pay off a smaller additional amount each month, and they should certainly not stop doing this, as it can still make a significant difference to the total cost of their property over 20 years”, continues Rademeyer. “If they can manage just R400 a month, for example, they will cut 21 months off the repayment term and save R184 000 worth of interest”, he says. “And if they are then also able to pay in a part of their bonus at the end of the year, or any money they receive as gifts or even tax refunds, they will be able to get the loan paid off even faster.”

Making as many lump-sum deposits as possible over the years, can really help to reduce the overall bond amount, meaning that you’re likely to pay off your home loan faster.