For many first time buyers, the process of applying for a home loan can often be daunting as they wait eagerly for a positive response from their bank.
“Taking time to understand how banks assess home loan applications can go a long way to helping you increase the chances of getting approval,” says Dr Simphiwe Madikizela, head of special projects at FNB Housing Finance.
He shares five tips to help consumers get their home applications approved without any delays:
- Check the valuation of the property – before a home loan is approved, banks conduct their own valuation to ensure that the amount being borrowed is not far off from the market value of the property, in case the property has to be re-sold in the future.
- Avoid taking on additional debt – many consumers mistakenly assume that banks only monitor their credit profiles and perform updated affordability checks prior to the home loan approval process.
However, this process continues for at least three months until the property registration process ends. Therefore, taking on additional debt or defaulting against credit providers can result in the bank repricing and in extreme cases declining the loan altogether.
- Saving up for a deposit – although banks occasionally grant 100% home loans, having a deposit demonstrates your ability to save and increases your chances of getting approval.
- Get pre-approval – getting pre-approval ahead of your home loan application gives you peace of mind by knowing whether you qualify or not. Your bank will normally ask for your latest payslip, three months’ bank statements, ID copy and proof of address for pre-approval.
- Checking your credit score – you are allowed to check your credit profile for free of charge once a year and can also purchase reports for a minimal fee from the credit bureaus. A clean credit record is essential for getting a home loan with any financial institution.
“If you qualify financially and have met all the above requirements you are one step closer to getting approval and ultimately owning the house of your dreams,” concludes Dr Madikizela.