ABSA launches new product to help first time buyers
Home loans for first-time buyers
The process of buying a property needs to be simplified to permit more entrants into the property market, allowing individuals who would not ordinarily be able to afford a house to become proud homeowners.
A great number of South Africans are unable to gain access to the property market because they simply cannot afford a deposit. The Family Springboard aims to help close that gap.
Absa’s Family Springboard home loan will allow applicants, who meet Absa’s credit criteria, to successfully apply for home finance if they have a helper who is willing to assist by investing 10 percent of the property buying price in an Absa Fixed Deposit account as security.
Carel Grönum, Head of Absa Home Loans, says as property prices have increased, the deposit required to buy a property has also risen, making it difficult for a lot of first-time home buyers to access the funds needed as deposit. He says many are increasingly turning to close friends or family, usually their parents or guardians, for assistance with raising a deposit.
“We have created a home loan offering that serves to formalise this financial arrangement between family members. It means that a new generation gets help buying a new home, while friends or family members assisting them get their money back with interest, provided that the repayments on the home loan are kept up-to-date.”
Grönum says the deposit ceded by the helper will be held as security for about 48 months and will be interest bearing. After this period, he says the helper can apply to have the deposit released - the release of the security will, however, be subject to a property valuation and credit approval.
A great number of South Africans are unable to gain access to the property market because they simply cannot afford a deposit. The Family Springboard aims to help close that gap.
The housing backlog in South Africa currently stands at 2.3 million and Absa Home Loans is committed to playing a role in addressing the housing challenges faced by many South Africans, he says.
Access to housing is vital for the sustainable growth of our country, he says, and they will continue to put their customers at the heart of the solutions they develop to ensure more South Africans gain access to the property market.
Grönum believes that the bank’s intervention in attracting new entrants into the property market requires a long-term view.
Arrie Rautenbach, Chief Executive of Barclays Retail Bank Africa, says Family Springboard forms part of a bouquet of value-adding solutions which Absa Retail Bank has introduced to make their customers’ lives easier and provide them with access to finance as they strive to become the go-to bank in South Africa.
In July this year, Absa also introduced MyHome, a home loan targeted at people earning less than R18 600 a month. The MyHome proposition offers Absa customers a 30 percent discount on initiation fees as well as a 30 percent discount on bond costs. The respective discounts are effective until 31 December 2014 and will be applicable to home loans which have been approved or attorney instructed during this period.
Having recognised the information gap in the market place, Absa in conjunction with the French Development Agency, furthermore established the First Time Home Buyers (FTHB) educational programme to educate consumers about the process involved in buying and owning a property.
The FTHB programme aims to educate 17 000 first-time buyers by the end of this year. Some of the topics covered by the programme include financial management, sustainable homeownership, repayment options and all other aspects related to buying a property.
Grönum says the financial services industry has an important role to play in closing the information gap in the market by ensuring that consumers are armed with the correct information to make informed decisions when buying a property for the first time.
Source - Charlotte Butler/Copestone Financial Solutions