Four powerful tips to ace that home loan application
Category Buyer Advice
Your home loan application can make or break your chances of owning your dream home. That's why it's essential that you get it right the first time.
If you're a first-time buyer, the process of buying property can feel overwhelming. Having the right estate agent by your side to guide you through the journey is vital - and so is making sure you tick all the right boxes during the home loan application process.
Follow the below advice, and what might have seemed overwhelming at first, will soon become a smooth and streamlined journey to owning the home of your dreams.
Here are our five tips to ace your bond application:
1.Get REAL home loan preapproval
This is a big one. Use a proper bond originator to get preapproved for a home loan before you start house hunting.
Here's why: Many online tools offer quick home loan estimators, but the amount these calculators spit out, is often not entirely accurate.
Online calculators don't always take your risk factors into account and may estimate the amount based on a lower interest rate than you can actually get.
As a result, you may end up thinking your budget is larger than it really is and set your sights on a home that is too expensive.
Sidestep this issue by merely reaching out to a professional bond originator for proper prequalification.
Contact us and we'll put you in touch with our trusted bond originators.
2. Calculate the extra costs before you apply for a home loan
There are several other costs involved in buying a house, and you'll have to save up for some of these to get approval for a home loan.
The deposit will likely be the largest of these extra costs. Most banks require a deposit of 10%, but this could be higher if your credit rating is low.
Make sure you save up for these extras before you get your heart set on a property because, without cash to cover this extra cost, your loan application unfortunately won't get approved.
3. Don't get into extra debt if you want to get your bond approved
The success of your home loan application is partly dependent on your credit score, although it's equally important to apply for a realistic amount and have a deposit ready.
When it comes to your credit score, nothing is more damaging than bad debt.
Having a substantial credit record and good debt, such as a reasonable car loan that you pay off diligently, actually boosts your credit score. But the money you spend using your credit card or store accounts for unnecessary luxuries is considered bad debt, and it can make or break your chances of getting approved for a home loan.
That's why it's very important that you don't take on any further debt once you decide to start looking for a new home. Any unnecessary or bad debt may count against you.
4. Apply for a house loan amount you can afford
It goes without saying that you are more likely to get a home loan for a property that is within your budget.
If you apply for a home loan that requires monthly repayments or instalments of more than 30% of your total gross monthly income, you're unlikely to get approval. Banks will only approve loans that they know clients can repay.
That's why it's key to know what you can afford right from the start. With the right information, enough money in your pocket to cover extra costs, and a healthy credit score, your chances of acing your home loan application is great!
Our team is here to guide you on your property journey. Contact us to find out what you can afford and explore our beautiful homes in the northern suburbs of Cape Town and other areas of the Western Cape.
Author: NS Property Solutions