Home Loan News: ABSA Home Loans opens up their 110% bonds to more households
Six months after they reintroduced the 110% home loan in March 2010, ABSA have announced that they are updating the requirements for their 110 percent bonds.
Applicants with a monthly income of R15 142 or less are now able to apply for a full 110% home loan. Previously, the maximum income allowed income was R11 000 per month.
The dual effect of earning a smaller income and constantly rising property prices, means that buyers in this income bracket are usually not able to put down a deposit or raise funds to pay for their bond registration costs. The bond registration costs include bank initiation fees and attorney fees, which can amount to about 4% of the bond amount.
ABSA Home Loans are partnering with the French Development Bank and USaid to empower low income earners and increase the access of homeloans to clients who were previously unable to secure property finance.
“We are looking at the blue-collar market,” Luthando Vutula, managing director of Absa Home Loans, said. “Teachers, nurses and police officers are typical potential customers.”
The National Credit Act allows borrowers to pay up to 30% of their monthly income towards a bond repayment. That means an applicant earning R15000 would qualify for a maximum home loan of just under R500 0000.
The 110% bond will not only cover the deposit and bond fees, but will also include insurance against HIV/Aids, free HIV testing and anti-retroviral treatment.
According to ABSA, the Home Loan Insurance included in this offer will cover your monthly bond repayments if you are unable to work due to Aids-related diseases. “Mortgage payments will be covered [by insurance] until you get better,” said Vutula.
110% Bonds for Higher Income Market
These 110% bonds are currently only available to low income earners, but the BusinessDay did report that ABSA are looking to extended their 110% Bond offering to the traditional higher income market before the end of the year.
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