You’ve saved for a deposit, you’ve cut clippings and searched the top websites to know what you want in your dream house. Now, you need to get a bond. Statistics show that nearly nine out of ten buyers* finance their homes with a bond, which means that virtually all buyers require home loans.
The good news is that obtaining a loan is not that difficult – but getting the best loan for you, that’s the potentially shaky part.
In recent years, good bonds have been harder to get as banks have tightened the loops that you need to jump through. But getting a bond doesn’t need to be a difficult process – not only are banks once again offering 100% loans, but we can also guide you with a few tips to being a smooth operator when it comes to applying for a home loan.
Can I afford it?
One of the best reasons for acquiring a pre-approved loan is to find out which market you are able to buy in. Although house-hunting can be exciting, it’s made far more enjoyable when you know that the house that you like is actually in your price-range and that you have a pre-approved bond, with all credit checks done, waiting for you.
You also need to consider that there are upfront costs of transfer and registration fees, which usually have to be paid outside of the bond. Monthly repayment affordability is commonly calculated at around 30% of your gross income, but there are further factors that are considered that will determine the size of the bond that will be granted.
An additional benefit of having a pre-approved loan is that it gives you better leverage with which to negotiate with the seller.
Have I maintained a good credit record?
The process of acquiring a bond has several hurdles that could cause the bond to be declined, one of which is your credit profile. This tells the bank, or lender, how you typically repay your debt. Any account that you have had, or currently have, contributes to this profile.
The best way to keep your credit rating as high as possible (and improving it) is to only hold accounts that you can afford to repay every month. If you have old credit cards or outstanding debt, pay your required installments on-time and cancel any accounts that aren’t active. Be honest with your bank if you know of accounts that are outstanding, it never looks good if you try to hide bad debt.
Do I know what interest rate I am paying?
The better your credit record, the lower your interest rate will be. The lender calculates the interest based on the risk of the client; if you are a low risk, you will be charged a lower interest rate, if you are a high risk, you will be charged a higher interest rate. Shop around for different loans and see who will offer you the best interest rate.
Kay Geldenhuys, property finance manager at ooba, says; “With the property market beginning to perk up and banks loosening lending criteria, as well as granting 100% loans, now is the best time in the last two years to apply for a bond.”
For more information – chat to us today.
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