SANLAM HOME LOANS
“please note Sanlam are not offering home loans at present.”
The Sanlam Home Loans Product
A Basic Home Loan for the financing of existing residential property, secured by a 1st continuing covering mortgage bond over the property.
Sanlam Home Loans does not have minimum income criteria, net surplus income and a maximum RTI determines the loan amount that the applicant qualifies for.
Register a Larger Mortgage Bond:
A client can register up to 150% of the loan amount for further use.
Non-personal-residential properties, including Guest Houses
Special Terms and Conditions:
HOC & Debit order payments are mandatory. Client will be advised to consider taking Life insurance through a Sanlam Financial Advisor or Broker. According to the National Credit Act, a client has 5 working days to accept the Pre-Agreement quotation before instructions are sent to the attorneys.
FlexiReserve – Access to Available Funds
Option is available:
Access to pre-paid future repayments only (additional funds);
A minimum withdrawal of R1000.00;
Clients can pay additional funds into the home loan by:
linking their account to their existing internet banking portfolio under “Third Party Payments” and by using the clearing code 630159, which will enable them to do electronic transfers, or
Effecting deposits at any ABSA Bank Branch;
Internet banking – Access to FlexiReserve and more
SHL clients have access to internet banking for individual and joint borrowers. Clients are able to securely access their Sanlam Home Loans account – which means quick and convenient access to information and FlexiReserve Funds transfers.
The following services are available on the Sanlam Home Loan account:
- Check home loans balances
- View transaction history
- Transfer available funds under FlexiReserve to a linked nominated transactional account. (Note that the nominated account MUST be in the clients’ name.)
- View and change personal details.
The Sanlam Home Loans Internet Banking Service is currently offered to customers free of charge. Sanlam Home Loans reserves the right to do so in the future. All Internet Banking queries and information on how to obtain the service may be directed to the Sanlam Home Loan Call Centre, on 0860 122 345 and following the relevant prompts for Internet Banking.
Sanlam Home Loans Money Manager
Sanlam Home Loans Money Manager is a facility that allows the client to spread a normal Home Loan over more than one account.
Each Sanlam Home Loans Money Manager account can be subject to a different rate structure and repayment term.
- NOTE: Normal Sanlam Home Loans rate options apply i.e. Variable or fixed.
Each Money Manager account has its own individual account number.
The client can opt for FlexiReserve on each Money Manager account.
NOTE: A client need NOT have FlexiReserve facility to be able to utilise Sanlam Home Loans Money Manager
Each Money Manager account will have a separate statement.
Each Money Manager account must be paid via a separate debit order instruction, which may be from a different source.
Each Money Manager account can have it’s own designation e.g.
- Primary account may be called “Home account”
- Secondary account no. 1 may be called “Pool” account
- Secondary account no. 2 may be called “Holiday” account
Benefits of the Sanlam Home Loans Money Manager account
- It allows the client to make optimum use of available funds in the Home loan.
- It facilitates prudent money management by allowing short term debt to be financed over a short term
- Allows for easy account management, with separate statements, account numbers and debit orders to the primary and each secondary account.
Who qualifies for Sanlam Home Loans Money Manager account?
All new and existing Sanlam Home Loan clients with sufficient security value in their property, subject to existing credit criteria.
IMPORTANT: Please note that normal lending criteria are applicable to the new loan or Further Advance and that there is no change to the current lending procedures. Sanlam may request additional information from the client, where necessary.
There is no additional cost for Sanlam Money Manager.
Money Manager Primary and Secondary accounts may each have its own rate structure. In order to determine the applicable rate variance (for a variable rate), the Loan Granted amount of both the Primary and Secondary account/s must be added in order to calculate the LTV (Loan – to – Value percentage)
The current Sanlam Home Loans rate matrix will apply.
The monthly Service fee is payable on the Primary account only
A client may ONLY elect to apply for Sanlam Home Loans Money Manager if it is submitted with an application for a new Sanlam Home Loan or a Further Advance on an existing loan. Reason for this is that because the client is signing a new agreement to open a Secondary account. Under NCA, this is viewed as a new money lending agreement and as such, must go through a full application assessment.
It follows that existing clients with FlexiReserve cannot withdraw funds under FlexiReserve and have that placed on a Sanlam Home Loans Money Manager option.
SHL interest rate matrix takes the loan amount and Loan to Value (LTV) into account when determining the base interest rate concession. This base interest rate concession can be either a positive or negative concession linked to the SHL mortgage lending rate.
The base interest rate matrix concession is further influenced by the following factors:
If it is an investment property and tenanted (use of rental income in income calculation)
Repayment to income ratio
The SHL risk assessment of the applicant
If the applicant has existing Sanlam products older than 12 months.
Positive adjustments to the base interest rate concession
The base interest rate concession can be positively adjusted (ie improved) as per the matrix if the Repayment to income ratio calculated on the SHL mortgage lending rate is less or equal to 27%.
Negative adjustments to the base interest rate concession
The base interest rate concession will be negatively adjusted (i.e. worsened) as per the matrix if the security is an investment property or if the Repayment to income ratio calculated on the SHL mortgage lending interest rate is more than 27%.
Discretion to adjust rate concession
Additional discretion to adjust the calculated interest rate concession will only be allowed if the client (all participants) has one or more existing products at Sanlam that is older than 12 months on the application date for the new loan. (0,05% per product to a maximum of 0,10%) Originators will need to get the product information from the client when requesting the additional discretion.
Re-advances and further loans
The above pricing matrix, rules and mandates apply to new loans as well as re-advances and further loans. Existing clients must be made aware on application that they will be entering into a new agreement if a further loan or re-advance is approved and that the rate and fees will be determined on their latest risk profile and the latest SHL pricing matrix.
THE SANLAM HOME LOAN PRICING MATRIX
Sanlam Home Loans Fixed Rates Pricing Matrix
Note: SHL will only approve a fixed rate once the bond has been registered. The matrix applicable at that date will be applied.
(EFFECTIVE 4 August to 10 August 2008 UNTIL FURTHER NOTICE)
|LOAN VALUE||Less than 80% LTV||More than or equal to 80% LTV|
R200k – R350k
R351k – R500k
* Fixed Rates is subject to change
- Initiation Fees
Ordinary Loan (New Purchases and Switches): R950.00 + 0.35% of Loan amount Maximum of R5 200-00 (vat inclusive)
Customers applying for further advances will be charged an initiation fee on the further advance portion onlyusing the calculation as set out above. An initiation fee will only be levied on the initial further advance thereafter any subsequent further advances will not attract any initiation fees.
Monthly Service Fees
- Loans outside of the Usury Act (Pre-NCA)
The monthly service fee on accounts with a total loan granted > R500 000, that does not fall within the NCA has been increased to R28.50 (including VAT). This is irrespective whether the customer has ABSA Home Owners insurance or is insured externally.
Customers whose loans fall under the Usury Act (total loan granted < R500 000, and entered into before the introduction of the NCA), will remain on the legislated fee of R5,70.
- Further Advances on Pre-NCA Loans
The monthly Administration Fee on those loans granted under the Usury Act, will be changed to the current Service Fees with the next Further Advance granted – no changes will be made on subsequent Further Advances.
“no cost switching offering”
What is the “No Cost” Switching Offering
This offering is made available to a specific profile of client who is not able to pay the costs associated with Switching.
Switching costs can either be treated as follows: –
- paid by client in cash,
- include costs into loan subject to LTV maximum, or
- the costs are paid on behalf of the client and the Interest Rate on his/her loan is then increased by 20 basis points to recover the costs from the customer over the term of the loan.
Originators to ensure that clients are informed and realizes that there will be an additional 20 basis points charged for the period of the loan by SHL for taking up this offer. This will also be applicable on Further Advances using this option.
It is believed that this offer will assist in convincing the client to Switch to SHL.
- Normal Home Loan qualifying criteria will apply
- Should this option be chosen by the client the consultant to highlight this in writing
- Current pricing matrix to be used in pricing the offering
- Attorney will calculate the costs and invoice SHL.
- The offering is seen a counter to offerings already in market place by competitors
Note: The following costs are still for the clients account: postages and petties, agent’s postages and petties, electronic document generation fee, bond cancellation costs, FICA, deeds office fee and initiation fee.
Benefits of the Offering:
Access to additional funds, solving own cash flow issues, availability of funds at reasonable rates, flexibility in choice and addressing different needs with regards to switching a home loan, ease and convenience from value proposition perspective.
When doing a ‘no-cost switch’ it is essential to establish whether it is going to be in your clients best interest for Sanlam to pay the 50% of the bond cost and to add 0.20% onto the rate or if the client should carry these fees and the rate applied as per matrix.
All new switching clients – choice to be given and client to decide on taking up the offering if unhappy or does not have the financial means to pay for the costs up front
How will we sell the No Cost Offering?
Originator to inform client of availability of offering.
Client has a choice of taking up or not.
Originator then to ensure the 20 basis points interest rate is charged
- Only available to Switching Clients
- Client choice important
- Normal SHL lending criteria apply
- Loan sizes between R300 000 and R1 000 000 to be considered
- LTV’s 80% and less
- Clients’ affordability to be assessed on higher rate inclusive of the 20 basis points
The Inbound call centre is the entry point for clients who need assistance with their Sanlam Home Loan once it has been registered.
Contact telephone number: 0860 122 345
SECTION 2 – Policies and Processes
Only applications that are 100% complete may be submitted for processing. Any incomplete applications received will not be processed.
SHL will assess the following types of applications:
- All applications for home loans irrespective of the loan amount.
- Applications for the purchasing of multiple residential properties and/or “off plan” properties bought from recognised developers.
- All applications received from trading legal entities where the residential property is bought for investment or speculation purposes and the legal entity is responsible for the repayment of the facility.
Applications for Clients under Debt Counselling
Applications by clients who are currently under debt counselling will be declined, except where the credit facility is for a Further Advance and is recommended by an accredited Debt Counsellor for the consolidation of debt.
Applications for Consolidation of Debt
Debt Counsellor Recommendation
Where recommended by the accredited Debt Counsellor, applications for the consolidation of debt may be considered.
Voluntary Consolidation of Debt
When requested by a client, SHL will consider the consolidation of debt as long as:
The loan applied for is either a switch or a further advance
The applicant is not insolvent or under administration.
The applicant is not under debt counselling
The consolidation results in an improvement in the customer’s cash flow.
The LTV on the new transaction is limited to max. 80%
The new debt repayment must be comfortably within his repayment ability
Repayment of the debt commitments to be consolidated must occur prior to any disbursements to the client.
Note: Consolidation of Debt refers to a situation where an applicant cannot afford the requested loan UNLESS certain debts are settled. Where an applicant can afford the new loan without settling any debts, even if they wish to settle such debts, this is considered “normal” lending.
Qualifying Criteria for a Sanlam Home Loan
Any person, single, widowed, divorced or married who has contractual capacity and who is a permanent resident of the RSA may apply for a home loan.
To qualify for a residential home loan, a comprehensive affordability assessment is performed, calculated per individual’s circumstances.
Affordability is based on the Household Net Monthly Income (HNMI), after salary deductions, household expenses and all debt instalments have been deducted from the total gross monthly income.
Applications where existing monthly instalments exceed the applicant’s income will be declined.
If HNMI < 0, the application will be declined.
Maximum RTI of 30% will apply for all applications.
Proof of Income
In order to ensure that an applicant has the necessary repayment ability, SHL requires authentic verifiable proof of income.
Due to the nature of various client types and their related source of income, different types of salary advices / proof of income / financial statements will apply, depending on the actual applicant:
- Salaried Applicants
All salaried applicants must provide the most recent, official pay slip / salary advice from his / her employer, which is to be verified by SHL as valid and correct.
Where the salary advice is in the form of a letter, indicating the clients’ income as a single, total “Cost to Company package” figure, a full breakdown of that amount / package must be obtained.
6 months bank statements are required in addition to the payslip to confirm the income.
- Weekly Paid applicants
When a client is paid weekly, multiply the weekly gross salary amount by 4,3, to calculate their monthly gross salary.
- Sole Proprietors / Self-Employed Applicants
The income of sole proprietors or self employed applicants / clients can be verified as follows:
Bank statements for the past 6 months must be submitted to verify the income reflected in the business financials, or
The income on the latest original (or certified copy) of the clients’ IT34 can be verified against the turnover on statement, or
For self-employed applicants, an unqualified letter from a registered accountant / bookkeeper, supported bypersonal bank statements.
Unqualified confirmation means that the letter from the auditor / accounting officer will state the following: “I hereby confirm that (the applicant) receives a monthly / annual income / drawings of Rxx”.
- Juristic Persons / Legal Entities (TRADING ENTITIES)
The following documents must be submitted and will be verified by SHL:
Latest signed (by the client and the accountant / bookkeeper) business financial statements not older than 6 months, supported by bank statements for the past 3 months.
For companies and trusts, audited financial statements are required
For CCs and partnerships, not audited, but must be verified by an accountant / bookkeeper “without qualification”.
- Applications in the name of Non-trading Entities
The reliance of repayment of the facility is placed on the individual director(s) / member(s) / trustee(s) of the non-trading entity. These individuals may be salaried or self employed and proof of income of each one of them must be obtained, as detailed previously.
Bank statements drawn from the Internet are valid and acceptable to SHL. If the internet statement does not reflect the name of the client, confirmation that the account is in that clients’ name, must be obtained from the relevant bank.
SHL staff assessing an application has the right to request / ask for additional information, should he or she deem it necessary, in order to make an informed decision.
In the case where the applicant provides 3 months bank statements reflecting a debit order or regular monthly payment to his bond account, or if the payslip reflects a stop order for a home loan, and the new LTV will be <80%, it will not be necessary to obtain statements on the client’s existing home loan account at the other financial institution.
Applications for switches where the LTV is greater than 80%, 3 months home loan statements must be obtained.
Rules Regarding Additional Income
If an applicant receives a home loan subsidy, which is not reflected on his salary slip, the applicant’s employer must confirm the amount of the subsidy in writing. The taxed benefit will be included.
Overtime is not regarded as permanent income and may not be taken into account if the applicant did not receive overtime in all three consecutive months (excluding leave period) prior to the application date.
Commission is not regarded as permanent income and when taken into account in the credit assessment, a three months average rather than a figure for a single month will be used.
See “Financing of Buy-to-Let Properties” below
Applicants may receive a subsistence allowance when they travel for business and are remunerated for additional expenses and inconvenience.
As a normal rule, subsistence allowance will not be considered as income, unless exceptionally agreed toby SHL and the applicant receives the allowance on a permanent basis; e.g. if the applicant is a pilot for an international airline.
If there is a court order and the applicant can prove that the maintenance has been paid for the last three months, the monthly maintenance or an average received can be added to the applicant’s income.
If an annual bonus (13th cheque) is paid as a lump sum, it may not be added as monthly income.
Monthly instalments must be paid by “Due Amount” debit order, with the option to pay “instalment only”. This due amount debit order will be a condition of any new loan or further advance.
A Buy-To-Let transaction is one where the client relies on rental income from the property being purchased (in part or in full) to service the monthly repayments on the loan applied for.
All BTL applications will be assessed as follows:
Where the loan amount requested is greater than R1.2 million, then the LTV% must not exceed 80%, or
Where the loan amount is less than or equal to R1.2 million, then the LTV% must not exceed 85%
Normal qualifying criteria are applicable to BTL transactions, in respect of affordability assessment rules and Proof of Income requirements.
The following additional conditions apply to Rental Income:
Rental Income may form part of the applicants Total Income and may consist of existing rental income and / or future rental income. Different percentages of these types of rental income will be used.
Existing Rental Income can be defined as rental income received from existing properties being let, where lease agreements are already in place. The applicant must provide proof of the rental income being received on a monthly basis for the past 3 months and 100% of the total rental income amount declared, may be used.
Future Rental Income can be defined as rental income not yet received, but will be forthcoming from the proposed BTL property. 1% of the property value or purchase price, whichever is the lower, is used in the calculation for future rental income, multiplied by a factor, to determine the actual future rental income figure which may then be used / included in the total income.
Future Rental Income Calculation Tables
Novice Investor (2 or Less Rented Properties ALL Registered with SHL)
|The factor indicated below is calculated on 1% of the property valuation|
|>R350k to <=R1.5million||0.4|
Experienced investor (3 or more rented properties all registered with SHL).
|The factor indicated below is calculated on 1% of the property valuation|
|Property Value||Factor x number of rented properties|
|3 to 5||6+|
|>R350k to <=R1.5m||0.5||0.7|
Property valuation = R1.2 million
1% of R1.2 million = R12 000
Factor to be used is 0.4 = R12, 000 x 0.4
Future Rental to be used = R4800
Building Standards for Residential Properties
Any improvements to properties forming part of SHL’s security must comply with SHL’s minimum building standards and requirements and with the Municipal/Local Authority building regulations.
Requirements of the Housing Consumer Protection Act (95 of 1998)
All new properties must comply with National Home Builders Registration Council (NHBRC) requirements.
A physical valuation is required for all SHL applications irrespective of LTV.
Property offered as security falls into one of three categories:
- High Risk
The following categories of property are regarded as acceptable security for residential mortgage loans, provided value is found in the property and the property can be/is insured:
- Cluster Housing
- Sectional Title Units
- Applications in respect of residential plots may be considered, based on the following rules:
- The loan must be for residential purposes, not agricultural (farming purposes) or commercial.
- Affordability assessment: Income must be from a source other than from production or farming activities.
- The plot must not be in a remote area where there is no municipal services
- As long as the property is zoned “Residential”, there is a 8,5 ha restriction in terms of the size of the land.
High Risk Properties
The following categories of property are regarded as high-risk security for residential mortgage loans:
A loan to purchase a unit in a retirement village may only be granted in exceptional circumstances and additional security may be required.. This is because SHL can sell a PIP in a Retirement Village only to a person 50 years or older and it therefore constitutes a risk to SHL in the event the borrower defaulting.
The following categories of property are regarded as unacceptable security for residential home loans:
Unproclaimed suburbs / township / land, which will only be subdivided into separate stands / sites at a later stage.
Advances against shares in share block companies
Finance for the improvement of rented/leased premises.
|Property Value Band||
Loan to Value Cap (Maximum LTV %)
Minimum and Maximum Loan Amounts Permitted
- There are no minimum or maximum loan amounts specified. The size of the loan approved is determined based on what the borrower qualifies for in terms of repayment ability, risk to SHL and the valuation of the property.
- For further advances and re-advances a cap of R5 million must be applied.
Registration of a mortgage bond for an amount in excess of the valuation of a property may be permitted.
Additional Security and Related Matters
Mortgage Protection Assurance
It is in the interest of both SHL and the client that mortgage protection assurance is taken out to cover death and disability.
Whilst this is not a compulsory requirement, mortgage protection assurance is recommended, particularly where the applicant’s existing assurance policies will not cover the mortgage exposure.
Houseowner’s Comprehensive Insurance
Houseowner’s Comprehensive Insurance (HOC) is compulsory. SHL has an arrangement with Absa Insurance Company who offers an HOC Policy and the client is given a quote at grant. However, the insurer remains the client’s choice. In the event of the client choosing another insurer, a copy of that policy must be submitted to SHL. A cession of the benefits under such policy in favour of SHL is compulsory.
The creditworthiness of the surety will be assessed by SHL.
Suretyships will be taken in the following instances:
- Where an application is declined and re-submitted with an offer of a surety.
- In the case of close corporations, private companies, partnerships, trusts, etc the unlimited suretyship of all the individual members / directors / partners / trustees will be required.
Where the income of joint purchasers is taken into consideration for granting a loan and the property is not registered in both their names, the suretyship of the person not mentioned in the title deed is required.
Cover / Cost Clause
An additional amount, being 20% of the registered bond amount, known as the cover / cost clause, is registered simultaneously with the mortgage bond to provide SHL with security in respect of legal costs and other incidental costs in the event of the borrower defaulting.
- Copy of offer to purchase
- Un-bonded property: a copy of the Title Deed
Individuals and Sole Proprietors
- Copy of ID, Passport or Birth Certificate
- Copy of utility bill to verify erf number (for switch) and current residential address.
- CC number or CK document.
- Addendum form to be completed for each member.
- Id’s of members.
- Deed of Trust and Letter of authority.
- Addendum form must be completed for each Trustee.
- Id’s of Trustee’s.
Companies & Incorporated Companies
- Copy of Memorandum and Articles of Association.
- Copy of certificate of Incorporation.
- Copy of Certificate to Commence Business.
- Addendum form must be completed for each Director.
- Id’s of Directors
Developers and Property Investors
- A rental schedule showing all properties owned and the rental income derived from each property. These are to be supported by lease agreements.
- Details of all other bond accounts with all banks.
- If a third party is acting on behalf of the client then copy of Power of Attorney is required;
- An NHBRC certificate is required for any property that has been built within the last 5 years;
- If a property is to be sub-divided then proof of subdivision is required prior to registration of the bond.