Would you build your own house if there was an expert willing to do so for free? Probably not – and the same logic should apply when it comes to securing the finance to buy a home, says Ria Venter, Gauteng Regional Manager for Rawson Finance.
“The banks all have different home loan credit criteria, deposit stipulations, documentation requirements and response times, so applying for a home loan on your own can be a nightmare,” she notes, “but if you apply through a reputable mortgage originator, you will have access to a home finance expert who is not only familiar with what each bank requires, but also with all the different mortgage products or packages currently on offer and the applicable interest rates”.
“This person will be able to guide you through the whole home loan application process, and substantially increase your chances of obtaining a loan. What is more, this service will not cost you a cent, because originators are paid by the banks but the banks don’t recoup those charges from you as the borrower.”
However, Venter says, free access to expert advice is just the first of several reasons to work with a good originator when you need finance to buy a home. These include:
Independent advice. “A reputable originator will never try to steer you towards any particular bank or specific home loan package. He or she will try to ensure that you have several options to choose from, and explain the pros and cons of each one with regard to your specific financial situation.”
Proper preparation. Before even submitting your home loan application, she says, a good originator will go through your finances with you and take a look at your credit history to see if there are any problems that could result in your application being declined. And if there are, he or she will be able to explain what you need to do to fix them and increase your chances of securing a home loan on good terms.
Simplified process. “Working with an originator also means that you don’t have to fill in a separate application for every bank, each with its own set of supporting documents. The originator will collect all the necessary documentation upfront and you will only need to complete one, universal application that can be submitted to any of the major lenders.”
Individual attention. Most banks use an automatic “scoring” process to evaluate home loan applications, and will reject your application if it does not exactly match the pre-set criteria. But, says Venter, a good originator will know how to prepare, package and motivate your application on a person-to-person basis – and substantially increase the likelihood of it being approved.
Fast responses. “If you apply for a home loan on your own it can take several days and even weeks to get a definite response or home loan offer and even longer if you want to be able to compare the offers from several lenders. A good originator will, however, have the knowledge necessary to get the application through the banks’ approval processes efficiently and quickly and should be able to present you with competing offers within 48 hours.”
Better interest rates. In addition, she says, strong relationships with all the major lenders will enable a good originator to negotiate a better home loan interest rate on your behalf, and that could save you many thousands of rands over the life of your bond. On a 20-year home loan of R800 000, for example, even a 0,25% reduction in the interest rate would translate into savings of more than R32 000.
Commitment and communication. “Mortgage originators are in business to get your home loan application approved, so will naturally devote all their attention to doing so, and free you up to get on with your own work. Working with an originator also means that you only have to communicate with one person to get feedback from all the lenders.”
Better results. Every time interest rates go up, the home loan application approval ratio goes down, especially among prospective buyers who are applying for loans on their own, Venter notes. “In fact, it is estimated that individual applicants currently have less than a 40% chance of being approved for a home loan. Those working with a good originator, on the other hand, have more than a 70% chance of being approved. That’s really worth thinking about – especially when the service is free and without obligation.”