Nothing is as soothing and comforting as the peace of mind that comes with living in a property you know is fully yours. Apart from the fact that you can do with it whatever pleases you in terms of decorations and settings, it is also a long term investment. By buying a home, you are investing in an asset for yourself rather than a property management company.
One of the major factors holding prospective homeowners from actually purchasing a home is finance. Finance is a setback to a lot of sectors. Now, have you always wanted to own your home but have limited resources to make it happen? Loans are now available to supplement your financial difficulties. How about we quickly look at what a private home loan entails before diving into the different kinds of lenders.
What is a private home loan?
A private home loan, also known as a mortgage loan, is a form of loan created between private individuals for the purchase of real estate. The lender could be a friend, family member, colleague, or investment firm. He loans the money to the borrower just as a bank would, securing themselves with a mortgage note or comparable contract.
A private loan has on major advantages over other forms of loans. It bypasses a lot of hurdles and red tape that you can associate with getting a loan from a traditional mortgage lender.
Benefits of a Private home loan
The private loan system has a couple of advantages over the traditional method of obtaining a loan. Some of the benefits includes;
- Unlike the bank loans, there is far less paperwork, underwriting criteria, and borrower qualifications for private loans.
- Private loans do not consider credit scores and income verification before granting a loan.
- In most cases, the application and approval process is much quicker and easier than it would be with a traditional lender.
- Private home loans come with far lesser or no additional fees at all apart from the loan interest.
Additionally, arranging a private loan with a trusted friend or family member can be a great way to finance a home purchase without any money going to a middleman.
Requirements for a private home loan
The requirements for getting a private loan might vary depending on the financial service provider. The following requirements are obtainable with a great percentage of South African credit providers;
- Valid South African ID
- Proof of income
- Schedule of monthly household income and expenditure
- Proof of address (A bill in your name which quotes your address)
- Offer to purchase
- Bank statement
Top 5 Private home lenders in South Africa
The ever available credit service South Africa enjoys through different finance bodies is something to be grateful for. However, to enjoy these advantages, it is important to know which service providers are available. The following is a list of 5 credit providers that can off;
Listed on the JSE, the Capitec Bank is one of Africa’s largest diversified financial services providers. Committing a great percentage of their resources on finding local solutions to uniquely local challenges. They are driven by the zeal of adding value and improving the lives of Africans. To this end, the Capitec loan offers a wide range of retail, business, corporate and most especially home loans.
FNB is the oldest bank in South Africa, and can be traced back to the Eastern Province Bank formed in Grahamstown in 1838. Two things in particular stand out FNB platform. The first is a story of survival – different circumstances in South Africa have posed many great challenges in our history, all of which FNB has successfully met. Apart from the fact that they are equipped with high grade loaning product, they have one of the best terms for home loans.
This is another great option for prospective home owners. Sentinel Homes is an alternative home financier to banks and other home loan providers serving the Western Cape and Gauteng areas. They are the first South African company to offer an alternative to bond finance in the open market. The company is the brainchild of the team at Combined Finance, which has been operating as investors and financiers in the real estate industry since 2013.
Ned bank is one of South Africa’s four largest banks. Whether you’re buying, building or switching your loan, Ned bank is available to assist you and help you take each step in your property journey with confidence. Ultimately, they are focused on ensuring you’re able to come home, every day, to your dream property.
Standard bank home loan
Standard bank is a deeply rooted financial service provider. A home loan from standard bank can provide you with a range of flexible options to help you make your next big move. Whether you plan on becoming a homeowner, a home builder or are already a homeowner. Their differentiator is their long term efficiency and commitment to Africa.
Private mortgages can be helpful for certain situations and can be a creative solution for borrowers. Especially those who may have difficulty borrowing or simply need the flexibility private lending offers. Weigh the risks to rewards before entering into a private agreement, and seek professional help for guidance as needed.