This week I would like to focus on the preparation phase of a home loan application.
All of the banks have an online calculator which helps you to get a basic sense of what loan amount you qualify for and what the repayment will be, but the problem is that these calculators do not take your specific circumstances into account and each of the banks have a different set of criteria which they apply to various application types. For example, if you earn rental income from an investment property, will all the banks use it, and if so, how much of it? Or if you earn income from abroad, which portion of it will the banks use and is there a limit to the percentage loan you could get?
A specialist like myself will ask the right questions, get the relevant information applicable to YOU, and then provide you with options on how to best structure your bond application to the various banks.
We also look at the credit profile of each person that will be involved with the property purchase as the banks still place heavy emphasis on this. A quick summarised credit check process will give us a very good indication of whether you are creditworthy to qualify for a home loan, whether you would be a candidate for a 100% loan (full purchase price of the property) or do you need to make provision for a deposit. It is senseless applying for a home loan if your income is nowhere near what is required to qualify for a specific amount, or your credit score is too low to get a 100% loan. On the flipside, you might qualify for a higher amount than you thought, or did not know that you could use the maintenance income you receive each month to qualify. What if you could build your credit score sufficiently in the months before buying a property, to then submit a much stronger application to the banks which will ensure a better scoring on their systems and with that, a better interest rate.
The entire aim of a pre-qualification is to make sure that when you find the perfect property and need to move fast to block out other prospective buyers, you can make an offer within your means with a realistic chance of success, and also use this to your advantage when negotiating the purchase price. It is vital to know exactly what you are letting yourself in for, regarding monthly repayments of a home loan at different interest rate & loan term scenarios as well as attorney costs for transfer of the property and registration of the bond.
Make sure you work with a reputable Bond Originator who has been in the industry long enough to know the different banks’ criteria for various situations and can guide you to prepare correctly for the day you put pen to paper.
I am available to provide written feedback to your pre-qualification enquiries within hours, free of charge. Kindly call or email me for assistance.
Yours in Home Loans…
Franchise Owner – Cape Town
082 926 2884 021 180 4541/2 0866 355 496