Financial Credit Rehabilitation Minimum Criteria
Home > Finance > Credit Rehabilitiation Finance > Minimum CriteriaThe details below outline the minimum criteria our bankers apply when assessing applications.
What we are trying to achieve is Financial Credit Rehabilitation using the equity ( value less outstanding bond) in a clients property to settle debt and then rehabilitate the client to normal credit standing. Once rehabilitated, the client is able to apply for a further bonds, loans and credit.
- Administration Order
We can now assist clients that are under an Administration Order with this product. We require a letter from the Administration Attorney authorising us to undertake a credit rehabilitation and Latest Distribution Documentation letter. - Bonds Statements
If bond repayments over the last 12 months are in arrears we cannot assist with this product BUT if one payment missed and then settled, then we may be able to assist. For those clients that have made irregular payments and/or that are in arrears, we have an alternative process. Please contact Rocky direct to arrange. - Market Value of home
Minimum home value to be more than R 100 000.00 - Affordability
At present we use the 30 % of gross income as the level of affordability. Please bear in mind that the banks interest rate is prime plus 2%. This is a non-negotiable rate. Please apply the Age Factor table below, to calculate affordability.
Factor :
21 - 45 yrs = 12.80
46 – 50 yrs = 13.66
51 – 55 yrs = 15.83
56 – 65 yrs = 23.53
Formula :
Gross Income x 30 % divide by “Age Factor” x 1000 = Qualifying Bond Amount
- Property Value
An official valuation will assist in determining true value but if not available then the clients’ or an estate agents estimated current value of the property will do for the Pre –Qualifying submission. Our bank valuators will do the final valuation. Minimum available equity ( after outstanding bond deducted must be R 60 000 - Loan to Value Ratio
The Loan to Value Ratio cannot be more than 80%. This means that the bank will not lend more than 80 % of the value of the property. Example Value R 500 000. LTV = R 400 000. Debt, existing bond , mandate fees, legal fees and bond registration costs are not to exceed R400 000. - Total Debt
Outstanding Bonds, Bond Registration costs, Legal Fees and Mandate Fee are not to exceed the 80 % Loan to Value Ratio. Debt can include all credit cards, judgements, garnishee orders, summons’ and arrears payments on accounts, school fees, micro loans, rates, motor vehicle leases and any traceable debt . - Minimum Income
At present the lowest single income to be more then R 3500 pm and combined income R 6000 pm. If another family member is available to stand surety, then incomes can be combined to increase the affordability level. - Commercial and Agricultural
We cannot assist this category of client. Gentleman’s residences ( residential zoning) under 8,5 HA can be bonded, if income is not dependent on agricultural activities. - Commission Earners
A minimum of 6 months bank statements are required. - Fringe benefits are to be proved
- Weekly Paid
24 pays slips Bi-Monthly = 12 pay slips required.
Costs to the Client
Costs are not payable up front and will be deducted from the equity in the property on registration.
- Mandate Fee
See schedule Approx 12,5 % on R 50 000 down to 3 % on R 1 million calculated on the 2nd bond - Bond Registration Costs
As per banks and attorneys schedule of costs. - Rescinding of Judgements
R 850.00 each - Debt Payments
R 250.00 per account
If the client meets the above criteria, then we will require the following to do a pre-qualification assessment
- ID : Clear copy of ID document
- Payslip (stamped by employer)
If available then please include the following :
- Client signed mandate to undertake credit checks
- Latest Bond Statement
- Latest Bank statement
- Municipal : Rates or Water Statement
- Letters of settlement and Garnishee orders
Should all the other information we require be readily available on our IT systems, then within 30 days we will advise the SBO and or Consultants on the IT system, whether the client has passed the pre-qualification stage or not and all further docs required.
It is now crucial that the Full Electronic application be captured on the system and that all letters of settlement are faxed/ emailed to the processing centre.
Consultants will be able to track the progress of applications on-line using username, passwords and clients details. Please be cautioned, that due to the nature of this category of application, the process is not as fast as normal bond applications. We are undertaking Credit Rehabilitation and financial planning and this has many other facets to it, that normal bond submissions do not have.
