I remember that feeling of excitement, that sense of freedom and the overwhelming knowledge that I was entering responsible adulthood when I signed the Offer To Purchase to buy my first house. Then the reality set in that this is the biggest financial obligation of my life… what if I don’t get a bond, what if I don’t earn enough to qualify for the loan I need, or lose my job and can’t repay it.. and where do I start with this very daunting process of applying for my first home loan?
Yes, it is daunting and yes, you are about to embark on a journey that will change your life forever, but as long as you get the right advice you will look back on this in a few years’ time and think, well, why didn’t I do that sooner?
Let’s start at the start. You need to be pre-qualified first. Before you even start looking at properties or set your heart on that quaint little cottage in that tree lined suburb or fall in love with the kitchen of your dreams, let’s first make sure you are bond ‘fit’.
This entails a free credit check that gives us a very good indication of how the banks will view your creditworthiness. In other words, how have you managed your existing debt up to that point. Your credit score is really the only way the banks have any idea of how you will repay the home loan they offer you, so it is a vital link in the chain of becoming a home owner. Make sure you have just enough debt in your name, and very importantly, that you manage it correctly by paying the instalment on time each month (yes, one day late is the same as paying it 30 days late), never skipping a payment and always making sure you have sufficient funds in your bank account for your debit orders (we will talk some more about credit and how to build a good credit profile in upcoming articles).
Another very important factor is affordability. What is the maximum home loan I will qualify for based on my income? And what will my repayments be on that loan amount?
Do the banks still give home loans over a 30 year term?
How will it affect me if Interest rates go up, which seems likely with the current political uncertainty.
Do I need a deposit when buying a house or will the bank give me a 100% bond?
Are there any costs in this process that I need to be aware of and budget for?
These are some of the major points I focus on when assisting a first time buyer in determining what their options are and what to expect from the bank when applying for their first bond. Each pre-qualification is unique, therefore I have a standard process for identifying the merits of each individual’s situation and providing the information you need to make this very important decision of buying your first property.
As always, this is a free service to my clients.
Buying a property is most probably the biggest financial investment you will make in your lifetime. Therefore, let’s make sure you do it right!
You are welcome to contact me for assistance.
Franchise Owner – Cape Town
082 926 2884 021 180 4541/2 0866 355 496
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