National Credit Act of South Africa Portal!
This portal is full of useful information relating to finance and credit news across the board. WELCOME!
NEW SECTIONS & LINKS
There's not such thing as a free credit check
How does the credit act affect attorneys?
New legal concepts
Top SA Bond & Conyevancing Attorney's - NCA Specialists
TOP CREDIT ACT LINKS
What the credit bureaus say about the credit act?
Is the national credit act affecting me?
How does this affect home loan financing
National Credit Regulators - Ncr.org.za
Click here to order your credit report now - NEW
...we estimate that well over 300,000 consumers in South Africa find themselves in an extreme over-indebted position, while a further million or more consumers are potentially debt-stressed. The challenge is huge, but the current situation can clearly not be allowed to continue. The impact and cost of over-indebtedness should not be underestimated, and is reflected in social grants being diverted into debt payments; maintenance payments that are not made; municipal service payments not being made; school fees not being paid and, finally, households being further impoverished and denied basic resources - CEO ncr.org.za.
Have home loans become tougher to get with the new National Credit Act? Well lets explore some of the affects of the credit act...
"Expect home loan approvals to get a little tougher when the New National Credit Act comes into force on June 1st," says Gerhard Kotze of ERA South Africa property group.
But is this entirely true? The Credit Act is there to prevent people from spending money they don't have. It's there to help the banks manage the massive CREDIT DEBT this country has and help stop RECKELSS LENDING by the banks.
The act puts banks and other lending bereaus on the spot, with major consequences if they're found advancing loans irresponsibly (responsible lending ACT 2007).
It's all to do with what's known as predatory lending practices and it's a global issue. What's more important is that Real Estate professionals and Bond Originators now have an added responsibility in this whole scenario, as intermediaries between home buyers and the banks. Having said that though, consumers/buyers need to watch their credit commitments and tailor their home loan application and the price of the home they buy accordingly.
GET NCA CERTIFIED TODAY!
CREDIT CREDIT CREDIT - Watch that spending people.
What is a CREDIT RECORD? Your credit record is exactly what it says, it shows your entire credit history which includes what loans you have applied for and what accounts you have opened as well as any negative credit listings where you may have fallen behind on payments or if have a judgment or several judgments against you.
This can be fixed. Bad credit records are not the end of the world, email the DEBT DOCTOR and let him help you!
For instance, one of things to take into account is the bond term you apply for. The typical bond loan is over 20 years, but bonds of up to 30 years can be obtained, in which case your monthly costs will be lower but your debt over the longer period would be considerably greater. Another thing to remember is the total cost of the buying transaction involved? Fees such as transfer duty, bond registration, conveyancing fees and other costs. It's a really good idea to include these costs in your bond application (see 108% bond). This would make it a whole lot easier for you to buy a property. Just remember that the additional cost does increase your total debt in terms of the New Credit Act of South Africa. Your rates will also be lower should you include bond costs.
IT COMES DOWN TO GOOD FINANCIAL PLANNING. MAKE SURE YOU HAVE A GOOD FINANCIAL ADVISOR.
So, before you commit to a property, be sensible; first establish the availability of bond finance based on your credit status.
Don't just go and sign that OFFER TO PURCHASE even if it's on condition of sale of your existing property and obtaining bond finance until you know where you stand in terms of financing your property. It all sounds pretty elementary but believe it, when you're in the HEAT of PASSION buying that always dreamt of property, it's amazing what you'll overlook!
Make sure you do your ground work and make sure you speak to someone that knows what they're doing.
It's basically going to come down to the banks assessment of the RISK of the borrower in terms of the ability to finance the bond.
Good news: As of now you are able to access you credit records free of charge once as year!
Click here to order your credit report now - NEW
How will this affect home loan finance?
The new national credit act of South Africa will come into affect towards the middle of 2007, compelling the banks to ensure that their mortgage clients do not over extend their credit limit. Previously, the bond repayments were not to exceed 30% of their proven dependable income. The new act will now make the banks legally responsible for checking the applicant's full credit situation. On bond application, clients will be asked to declare their income as well as their expenses.
With the new act, the banks will have to be fastidious about ensuring that the client has declared all debt, for example car repayments, credit cards, retail accounts and any other debt the client may have; if they have another home loan; or a rental agreement (where applicable) it will also be regarded as a mandatory requirement.
Investors who invest in off-plan purchases may find it more difficult to obtain finance if they have mortgages with other financial institutions, thereby making multi-property ownership finance more difficult to secure.
The simple answer to obtaining mortgage finance is to make sure that your finances are in check as this will enable the bank to make a quick assessment of your affordability.
The interesting part about the new act is that if a bank does allow a borrower to over extend on their credit after disclosure of their financial situation, the bank could be sued by the borrower should the debt result in the borrower not being able to repay that debt, as well as incurring a possible fine for contravention of the act.
It also works in the bank's favour. Should the disclosure from the borrower not be accurate, the property could be repossessed and the client blacklisted.
What the Credit Act means for you!
There's no denying that credit is a good thing. It gives you that extra edge when you want to buy those things that have alwyas been out of your reach. Without access to these additional funds how would you afford that dream lifestyle?
The problem comes in where debt can quickly spiral out of your control.
So the trick, manage your finances. Allow Wizard to help you manage your finances and utilise your bond account to consolidate your debt.
Only borrow what you can afford
The NCA focuses on protecting people from becoming financially overcommitted. As such it prevents us from lending money without ensuring that:
- We know your debt repayment history -
- You understand the costs, risks and responsiblity of your credit agreement -
- You can afford to repay your debt -
- You have supplied details of your income and expenses when applying for credit -
The NCA according to Nedbank
Fees and Charges
Although Nedbank's fees have always been fair, the NCA now lays down the maximum initiation and service fees and interest rates as stipulated by the type of loan agreement.
It also specifies that, as part of the loan you may be required, depending on the tyoe of loan agreement, to pay:
- The cost of any warranty agrement
- service fees, default and collection fees
- taxes and licence or registration fees
- credit insurance
Include your Spouse
In order to empower all the people the NCA requires that you obtain your spouses consent to enter into a loan agreement or to apply for further credit if you are married in community of property and the loan application is in joint names.
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