Updated: Nov 4, 2018
Every so often, buyers, who have already fallen in love with a property they want to purchase, put all their hope and faith into their estate agent or bond originator to handle the bond application process, and hope to succeed. Unfortunately, staying out of the bond application loop, often results in buyers never really understanding what banks require, when they receive a new bond application. Fact is, buyers can largely increase their chance of qualifying for home loan, if they are aware of the typical obstacles buyers encounter, when applying for a bond.
Four aspects that may prevent a buyer from getting a home loan:
A low credit score – Consumers in South Africa have the right to get one, free, credit report annually, from a registered credit bureau. As a prospective buyer you should use the opportunity to verify your current credit score before you even apply for a home loan.
Credit scores feature your historical management of your own money. Credit providers use this information to see how well you pay your bills and whether you are able to keep your other financial commitments. This determines whether they will approve your bond application or decline it.
You are advised to check your credit score prior to the house hunt. Hereby, you will know whether to embark on a house hunt or not.
Affordability – often potential buyers fall in love with properties way above what the lender
will consider affordable for the applicant. Lenders may decline your bond application when they reckon the monthly installments are too high in comparison with your monthly income. You are advised to offer a larger deposit on the property in order to lower the bond amount OR buy the property in the name your and your spouse's or partner's names. If this is not an option, you may need to look for a more affordable property.
Unsatisfactory property evaluation – part of the home loan application, is the lender's
valuation of the property you hope to purchase. If their assessor is of opinion that the property is in a poor condition or over priced, they may decide to decline the bond application. Ask the agent to present you with a patent and latent defect list of the property. Hereby you will determine whether there are any serious issues with the property that the seller know of, such as damp in the walls or a leaking roof that may cause discomfort or loss in the near future.
Unstable monthly income – when applying for a home loan, you, as a prospective buyers are obliged to present the most recent payslip as well as three months’ bank statements. Hereby, the credit providers are able to determine whether you are indeed employed and if you receive a regular salary. Applicants who are self-employed are expected to present a minimum of six months’ worth of financial records or bank statements.
You are advised to get this documentation in order before you start your house hunt, for, when you find your dream home, you want to be ready to confidently sign the Offer to Purchase there and then. An incorrect declaration of monthly expenses – be sure not to duplicate expenses on your
application. Be sure to ask your bond originator if you are unsure how to state you expenses such as fuel and groceries correctly. If you unsure about the bond application process or want to get pre-qualified for a home loan, feel free to Google a local bond originator or contact me. I will gladly assist you and put you in contact with a reputable bond originator.
Happy House Hunting!
Contact Alta, The Property Match Maker, from SEEFF, if you want to buy or sell property in
Centurion, South Africa. She has a wealth of knowledge and delivers service excellence with flair! Mobile: 071 758 0996