---National Credit Act---


REQUIREMENTS UNDER THE NEW CREDIT ACT

In terms of the new “CREDIT ACT” the banks and other Financial Institutions will qualify the person applying for a bond differently from in the past.
(The qualifying criteria will no longer simply be a repayment of no more than 30% of the applicant’s gross income but will also require that the applicant has sufficient net surplus income in order to pay the monthly loan repayment on the loan being applied for.)

BOND AMOUNT

WHAT FORMULA DO YOU USE TO WORK OUT THE REQUIRED INCOME?

Repayment not to exceed 30% of gross income:
? Bond repayment ÷ 0.3 = Required income
? R9,000-00 ÷ 0.3 = R30,000-00

Next you must establish the “nett surplus income”
How is this done?

NETT SURPLUS INCOME:

Gross Income
Less: Salary deductions
= Net Income (bank account)
Net Income
Less: monthly debt repayment (Mortgage Bond Payments, Car Loans, Credit Cards, Personal Loans, Overdrafts, Retail Accounts)

Less: monthly expenses (Groceries, Cell Phone, Domestic Help, Chemist, Telephone, Security etc.)
= NET SURPLUS INCOME

HOW MUCH BOND?

Net Surplus Income × 1000 and ÷ by the prime factor (currently 11.72 at a prime rate of 13,00%)

Example:
If the net surplus income is R3, 000-00
? 3,000 × 1000 ÷ 11.72 = R255,972-70
? Therefore a bond of +/- R255,000-00 would be the qualifying amount
? Repayment on a bond of R255,000 at prime will be 255 × 11.72 = R2,988-60 per month

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