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Celebrating Women

Women entrepreneurs With as many as 50% of our valued Business Partners who are female, SKG Home Loans prides itself on creating opportunities for women entrepreneurs to set up successful small businesses by empowering and supporting their work. Experience has taught us that their deep roots and close ties to their communities mean they understand their clients’ needs and are able to provide personalised service in making many individuals’ dreams of homeownership come true. The results are life-changing for those who are able to set foot on the property ladder, and that’s what SKG Home Loans is all about.

Family values Ours is a business that is built on family values and this is another aspect where women have made a tremendous contribution to our operations. SKG Home Loans really is a family and the fact that so many of our valued Business Partners have been with us for a long time says a lot about the success of our joint working relationships. Their loyalty, support and commitment have helped us get to where we are today!

Female first-home buyers It is also promising to see that the current lending environment – interest rates at 50-year lows and a transfer duty threshold that’s been increased to include properties up to R1 million – is encouraging many first-home buyers to make the move from renting to buying, especially if we look at the lower price brackets. As many as 70% of our home loan applications are currently coming from first-home buyers and many of these are women. At present, our typical homebuyer is a professional woman in her late-30s. The statistics tell us that buyers are now more able to prioritise property investment thanks to improved affordability, which relates directly to the interest-rate environment and the increase in the transfer duty threshold.

Property has proven itself to be a resilient asset class with the potential to help build financial security over time, so it’s heartening to know that women are making use of these opportunities to potentially secure their future. 

Economic reality Not only are these trends making a difference to the economic reality of many individual South Africans, but there is also the broader impact, which is what the government intended when implementing these measures, namely stimulating the economy. In this regard too, SKG Home Loans is committed to playing its part in keeping the wheels of our country turning.

We acknowledge and appreciate the many women who contribute on a daily basis to our success through their individual flair and invaluable contributions. We salute you!

Home loans

What you need to know about FLISP

The Finance Linked Individual Subsidy Programme (FLISP) was developed by the Department of Human Settlements to enable sustainable and affordable first time homeownership opportunities to South African citizens and legal permanent residents earning between R3 501 and R22 000 per month, (the ‘affordable’ or ‘gap’ market). Individuals in these salary bands generally find it hard to qualify for housing finance; their income is regarded as low for mortgage finance, but too high to qualify for the government ‘free-basichouse’ subsidy scheme. FLISP enables qualifying beneficiaries to reduce the initial home loan amount or augment the shortfall between the qualifying loan and the total house price.

What to do with FLISP?

  • Buy an existing, new or old, residential property;
  • Buy a vacant serviced residential stand, linked to an NHBRC registered homebuilder contract;
  • Build a residential property on a self-owned serviced residential stand, or tribal stand (PTO) through an NHBRC registered homebuilder.

The once-off FLISP subsidy amount ranges between R27960 and R121626, depending on the applicant’s monthly income.

Who can apply?

Applicants intending to acquire residential property may apply for FLISP if they meet the following qualifying criteria:

  • South African citizen with a valid ID; or permanent residents with a valid permit;
  • Over 18 years and competent to legally contract;
  • Have never benefited from a Goverment Housing Subsidy Scheme before;
  • Have an Approval in Principle of home loan from an accredited South African financial institution; and
  • First time home buyer, earning from R3501 to R22000 per month.

Requirements:

The following CERTIFIED COPIES are required as supporting documents when applying for FLISP:

  • RSA bar-coded Identity Document (ID)
  • Bar-coded Permanent Residence Permit (where applicable)
  • Birth Certificates/RSA ID’s of all financial dependants (where applicable)
  • Proof of Foster Children Guardianship (where applicable)
  • Marriage Certificate, Civil Union Certificate or Cohabiting Affidavit*, Proof of Partnership (applicable)
  • Divorce Settlement (where applicable)
  • Spouse’s Death Certificate (where applicable)
  • Proof of Monthly Income
  • Home Loan Approval in Principle/Grant letter from an accredited Lender
  • Agreement of sale for the residential property
  • Building Contract and Approved Building Plan (where applicable)

FLISP REDUCES the initial home loan amount making monthly loan repayment instalments affordable (payment made to home loan account)

SUBSIDY QUANTUM Example 1 is based on an R9 000 p/m income – band, where the individual after the Lender/Bank’s credit and affordability assessment, based on the National Credit Act (NCA) criteria,qualified for R300 000 home loan. FLISP AUGMENTS shortfall between the qualifying loan amount and the total product price (payment made to transfer attorneys)

SUBSIDY QUANTUM Example 2 is based on an R9 000 p/m income-band, where the individual after the Lender/Bank’s credit and affordability assessment, based on the National Credit Act.

The Lender/Assess home loan applications according to their own credit and affordability assessment standards and the National Credit Regulation’s lending criteria.

Option 1: Development Housing Projects Once Lender grants home loan approval or ‘approval in principle’,Developer submits the applicant’s completed FLISP Application Forms to the NHFC

Option 2: Open Market Once Lender grants home loan approval or ‘approval in principle’,applicant or Estate Agent completes the FLISP Application Forms obtainable from NHFC website, Human Settlement Provincial & Regional Offices and some Estate Agents

home loan family

What you need to know about Islamic banking

The FNB Islamic banking residential property finance product provides you with Shariah-compliant finance for residential property and vacant residential stand or smallholding.

Features Offered:

  • Finance is offered in both personal and business capacity
  • Share-block finance is not offered
  • Finance period ranges from a minimum of 5 years to a maximum of 20 years
  • Early settlement is possible
  • Max age for finance – 65 years (if the applicant is 65 years old at the time of application, the maximum term offered is 10 years)

What Islamic banking property finance offers:

  • A competitively priced deal
  • Profit rates fixed for a year, reviewed annually
  • The ability to make lump sum payments on an annual basis
  • Possibility of re-advances upon anniversary

Upon receipt of all the required documents, the application is submitted for processing and full assessment. A team of specialists will be in communication with the client throughout the application process.

A final approval may be provided within 5 to 10 working days including the property valuation. Once final approval is granted an approval letter is forwarded to the client for acceptance. Upon acceptance, the bank’s attorney is instructed to proceed with registration. Registration may be complete within 10 to 12 weeks.

The FNB Islamic product is based upon the Diminishing Musharaka concept, whereby the agreement operates as follows:

  • The bank and the customer jointly acquire or create a joint ownership in the identified property
  • The proportionate ownership is usually decided by each party’s contribution
  • The banks share is then divided into a number of units, with the understanding that the client will periodically purchase these units from the bank. This process will continue until the client acquires the banks entire share and becomes the sole owner of the property attorney stage

The following costs are associated with the finance application:

  • New bond cost
  • Initiation fee (once-off)
  • Service fee (monthly)
  • Attorney fees
  • Deposit (if required)

All of which will be on the final approval and quoted at attorney stage

FNB Insurance Brokers now offers Takaful – a Shari’ah compliant alternative to conventional insurance. This allows you to finance your asset and allows for its protection by using a credible and competitive insurance product that is in conformity with the principles of Shari’ah.

Investment loans

Deposit? Here’s what you need to know

Everything you need to know about your deposit when buying a home. Paying a deposit when you sign an offer to purchase a new home is considered a show of commitment. But how much is needed and what happens to these funds? Unless stipulated in the offer to purchase, there is no legal stipulation that a deposit must be paid, however, it is seen as confirmation of the buyer’s commitment to the sale. Traditionally, the deposit amounts to 10% of the property purchase price and is kept in an interest-bearing trust account. If the sale should fall through due to breach of contract, the prospective buyer stands to lose his or her deposit. However, sales that fall through due to bond disapproval do not generally incur forfeiture of the deposit.

Why do I need to pay a deposit?

While the inclusion of payment of a deposit is common practice in South Africa, it is actually not compulsory. In fact, the current negative real property price growth in the South African market, and the need to appeal to first time home buyers, have made banks more open to granting 100% home loans (where no deposit is required). However, if the offer to purchase specifically stipulates that the buyer pay a deposit, failing to do so will then constitute a breach of contract and the seller has the right to cancel the deal. In effect, a deposit is a sign of commitment on the part of the buyer and reassures the seller that the buyer is serious in his or her intention to purchase. On the other hand, a deposit also offers some protection to the prospective buyer as it discourages the seller from cancelling the contract.

How much of a deposit do I need to pay?

The deposit amount can range from a few thousand rand to 20% of the property purchase price, depending on the seller and estate agent. Currently, most agreements call for a deposit of around 10% of the purchase price, however, with the help of an estate agent, this can be negotiated with the seller.

How will my deposit be managed?

The buyer has the choice of paying the deposit to either the conveyancing attorney who has been appointed to handle the transfer of ownership, to the estate agency negotiating the deal, provided the latter is logistically able to take deposit payments, or to Buyer’s Trust. The deposit should be safely held in an interest-bearing trust account where it will earn interest until the transfer of ownership goes through.

Will I have to pay for this service?

While the conveyancing attorney, estate agent or Buyers Trust will charge an admin fee, this will usually be deducted from the interest earned and not the capital investment.

What is Buyer’s Trust, and how can they help me manage my deposit?

Buyers Trust offers a safe and convenient way to manage your deposit.

How it works:

Buyers Trust creates a bank account with one of the major banks in your name, transfers your deposit into that account, and administers the account under a specific investment mandate provided by you. They issue a guarantee to the transferring attorney that you have fulfilled your contractual obligations to the property seller. You are able to easily keep track of all interest you earn on the account. The Buyers Trust fee covers everything, including administration fees charged by the bank; so there will be no additional charges. Once the property has been transferred, and the deposit

paid to the seller’s attorneys, the account will be closed, and the net interest earnings delivered to you. Buyers Trust is regulated by the Financial Sector Conduct Authority, and takes extensive measures to combat fraud and ensure the security of your deposit.

What if the sale falls through?

If you, as the buyer, are in breach of the contract, and the breach cannot be rectified within a stipulated time frame, you will forfeit your deposit and the seller has the right to use this to cover any damages (such as legal

costs) that have resulted from the deal having fallen through. If your offer to purchase is contingent on bond approval and if, for whatever reason, your financing is not approved, your deposit will be refunded to you. However, if you deliberately withdraw your bond application, you could find yourself in breach of contract and you may lose your deposit. Ultimately, paying a deposit helps to ensure that both parties honour the agreement of the offer to purchase. A deposit is an excellent way to show goodwill and secure the sales agreement on the home of your dreams. It also improves your chances of securing a favourable interest rate on your home loan from the bank. If you’re considering taking the next step and investing in a property, bear in mind that SKG home loans is your BEST choice, offers a range of tools that can make the home-buying process a lot easier.

Couple home loan

Got pre-approval? Here’s how to keep it

Once you have been pre-approved for a home loan through an originator like SKG Home Loans, you should avoid making any significant changes to your financial situation until you have bought your new home and your home loan has been activated. It would seem obvious, for example, that you need to keep paying your bills in the time between home loan pre-approval and the transfer of your new home, but it’s easy to forget things or pay late in the excitement of house hunting. In addition, you should make sure you do not go into overdraft on any of your accounts, and that any debit order payments are left as they are.

The reason is that your pre-approval is a “snapshot” of your financial situation at a time, and you need to stay as close to that picture as possible until your home loan is granted. Therefore, you should also not apply for any new credit during this period. Mortgage lenders are bound to do a second credit check before a final loan approval, and if you have opened a new account, this will have to be verified, which could delay your approval. Your credit score could also change because of the new account and that might mean an adjustment to the interest rate you will be charged on your home loan. What is more, if you have bought something major on credit, lender will have to factor the repayments into your debt-to-income ratio to reassess the affordability* of your home loan in terms of the National Credit Act – and that could result in you not getting the loan at all. You should also be careful about paying cash for large purchases at this time, or even paying off a debt like a credit card balance, as that could result in you having lower reserves to cover a deposit or the transfer costs, and once again change the lender’s assessment of your financial situation when it comes to granting the loan. If you decide to change jobs after you received pre-approval, lenders will ask for a new employment contract and a dummy payslip when they assess your actual loan application, in addition to payslips from your old job.

And finally, although adding to your assets should not be a problem, you should keep records of any unusual deposits into your bank account at this time. If you receive a bonus or a gift of cash, for example, or sell some shares or other assets, you must be able to prove where the money came from. In short, every move you make with your money will have some sort of impact, so you should consult your bond originator and the lender that gave you the pre-approval before you do anything.

Family home bonds

Shine up your finance

If you are planning to buy a home, spring is a great time to freshen up your finances. Just as home-owners prepare their properties for show days and viewings by cleaning, polishing and painting, so potential home-buyers need to make sure that their finances are in good shape before they go house-hunting or apply for a home loan. This is important because although the banks are currently actively seeking to lend to home-buyers, they still require borrowers to have clean credit records and sufficient disposable income to be able to afford the loan repayments. In addition, those who have saved up and are able to pay a deposit may well be able to qualify for an interest rate concession, especially if they apply for their home loan through a reputable originator like SKG Home Loans. And this could save them many thousands of Rands on the total cost of their home over the lifetime of the loan.

Consequently, those who are planning a home purchase should begin by decluttering and

cleaning up their finances as follows:

• Dust off your budget. By this time next year, many consumers are no longer sticking to the budget that they drew up in January. But if you are serious about reaching your financial goals – including a home of your own – you need to know exactly where your money is going every month, whereyou cans ave and how long it will take to pay off your debts.

• Shoo away the budget “vampires”. Review all the subscriptions and services that you pay for every month via debit order and that could be draining money from your budget without you even really noticing. Charges for these services tend to creep up during the year and the combined total of those increases can be quite substantial, so it’s always worth taking a second look at what you are actually paying for things like your gym membership, cellphone contract, streaming services, garden maintenance and storage space.

• Brush up your loyalty cards and rewards programmes. It’s a great feeling to earn points or Rands for your purchases, but you need to gather them strategically. For example, if there’s a monthly charge to belong to a rewards programme that is more than you would earn from the programme, ditch it. With stores cards, make sure you don’t fall into the trap of spending just to earn points, and stick to a few where the points don’t expire quickly and you can accumulate a stack for something special – like your birthday, or holiday spending, or single expensive item you’ve had your eye on.

• Toss out bad spending habits. Most of us can’t do much about the cost of things we have to pay for, like food, petrol, electricity, school fees and the roof over our heads. But we can change routines to avoid a substantial amount of what is called discretionary spending – like the cost of drinks with friends every Thursday night, or lunch out with the family every Sunday, or shopping for new clothes once a month. Plan alternatives and make compromises and use what you save to pay off debt – you’ll thank yourself later.

• Steam clean your credit record. Everyone is entitled to a free credit report from a credit bureau once a year. Even if you think your finances are in good shape, now’s a good time to check your report and make sure there are no nasty surprises, like old accounts you forgot to close or someone else taking out credit in your name. To improve your credit score, you should also make sure that you make all your account and card payments on time every month. And if you have a bad debt or judgment on your record, you need to address it and remove the “stain” before you apply for a home loan.

• Scrub away your debts. It’s all too easy to think that you don’t owe that much when you have borrowed from several different credit providers, and when you add up everything outstanding on your car, your furniture, your credit card and your store accounts, not to mention any personal or student loans, the total can come as quite a shock. But if you want to be debt free, it’s important to be realistic and then to make a proper plan to pay everything off – and avoid too much credit in the future.

• Start looking for ways to earn extra cash. Clear out your cupboards or storage unit and hold a garage sale. Get creative and sell things you make online. Create a “side hustle” by using your knowledge, skills and spare time to do something people will pay for. Work part-time in the evenings or on weekends. Put any additional money you make into paying off your debt, and then start saving for the deposit on your home.