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Bonds Harder To Get With Credit Act
"In simple terms," said Steward, "this means that it will become more difficult to get a bond if your financial position is not completely sound."
Previously, said Steward, bond applicants had only to prove that their monthly repayments would not exceed 30% of their family's income.
Now, she said, the bank is legally responsible for checking the applicant's full credit situation including money owing on cars, credit cards, household goods and other properties. Multi-property ownership, therefore, is likely to become increasingly difficult.
Steward said that the credit bill is wise and necessary, even though it could eat into the individual's privacy.
"There are in South Africa today," she said, "more people earning "middle class" salaries. Too easy credit can be dangerous if one is not accustomed to budgeting. It is a skill that is only gradually acquired."
Surprisingly, said Steward, under the new act if a bank does allow a borrower to overextend on his credit after he has disclosed his financial situation, he could actually sue them if he then gets into difficulties. Conversely, if the borrower has hidden any debts from the bank they could sue him for whatever money he still has.
One of the spin-offs of the new act as well as of the high interest rates, said Steward, will be to increase the importance of getting a really accurate valuation on a property that you intend to sell before making plans to buy a new home.
"Responsible agents," said Steward, "normally insist on a second or third price valuation on the property that the buyer is selling before he signs on for a new home. Regrettably, often the home does not achieve anything like the valuation (because the agent has overpriced it to get the mandate, a practice we absolutely forbid at APKF) and the buyer is then either forced to pull out of his deal or find himself landed with a far larger debt than he had anticipated."
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Posted on Friday, January 26, 2007 (Archive on Wednesday, January 31, 2007)
Posted by hayleym Contributed by hayleym
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