How to improve your chances of getting a home loan

Every so often, buyers, who have already fallen in love with a property they want to purchase put all their hope and faith into their estate agent or bond originator to handle the bond application process and hope to succeed. Unfortunately, staying out of the bond application loop often results in buyers never really understanding what banks require when receiving a new bond application. 

Fact is, buyers can largely increase their chance of qualifying for a home loan if they know the typical obstacles buyers encounter when applying for a bond. 

Four aspects that may prevent a buyer from getting a home loan: 

 A low credit score – Consumers in South Africa have the right to get one free credit report annually from a registered credit bureau. As a prospective buyer, you should use the opportunity to verify your current credit score before you even apply for a home loan. 
Credit scores feature the historical management of your own money. 
Credit providers use this information to see how well you pay your bills and whether you can keep your other financial commitments. This determines whether they will approve your bond application or decline it.  
You are advised to check your credit score before the house hunt. Hereby, you will know whether to embark on a house hunt or not.  

 Affordability – often, potential buyers fall in love with properties way above what the lender will consider affordable for the applicant. Lenders may decline your bond application when they reckon the monthly installments are too high compared to your monthly income. 

You are advised to offer a larger deposit on the property to lower the bond amount OR buy the property in the name your and your spouse's or partner's names. If this is not an option, you may need to look for a more affordable property. 

Unsatisfactory property evaluation – part of the home loan application is the lender's valuation of the property you hope to purchase. If their assessor believes that the property is in poor condition or overpriced, they may decide to decline the bond application. 

Ask the agent to present you with a patent and latent defect list of the property. Hereby you will determine whether there are any serious issues with the property that the seller knows of, such as damp in the walls or a leaking roof that may cause discomfort or loss shortly. 

Unstable monthly income – when applying for a home loan, you, as prospective buyers, are obliged to present the most recent payslip as well as three months’ bank statements. Hereby, the credit providers can determine whether you are indeed employed and receive a regular salary. Self-employed applicants are expected to present a minimum of six months’ worth of financial records or bank statements.

You are advised to get this documentation in order before you start your house hunt, for when you find your dream home, you want to be ready to confidently sign the Offer to Purchase there and then. 

An incorrect declaration of monthly expenses – be sure not to duplicate expenses on your application. 

Be sure to ask your bond originator if you are unsure how to correctly state your expenses, such as fuel and groceries. 

If you unsure about the bond application process or want to get pre-qualified for a home loan, feel free to Google a local bond originator or contact me. I will gladly assist you and put you in contact with a reputable bond originator.

Happy House Hunting!

Contact Alta, The Property Match Maker, from SEEFF, if you want to buy or sell property in Centurion, South Africa. 

She has a wealth of knowledge and delivers service excellence with flair! 

Mobile: 071 758 0996

alta.nel@seeff.com

https://altanel.co.za

#ALTANEL

Buying a property: The most common questions property buyers ask

Buying a home can be a roller-coaster experience: it is a thrill to visit properties on sale and to look for the dwelling that makes your heart skip a beat. However, it is also an intimidating experience with tonnes of paperwork! Besides signing serious, binding contracts, you may need to make large financial commitments for many years to come and separate with some hard-earned cash. If you are thinking of kicking off your house-hunt, you may have many questions occupying your thoughts. Here are the answers to a number of common questions that you may also have:  

Q: What home can I afford?

You may dream of one day owning a villa on an exotic island, but in reality you may not be eligible to afford such an amazing villa just yet! Your current amount of cash in hand, your monthly income or joint income with your spouse, as well as your current financial obligations are what determines your affordability.

If you don't have the cash available to do an outright purchase, you need to know that banks calculate the bond amount you could qualify for on about a third of your gross monthly income – in other words, what you get in total before you pay taxes, your medical and other insurance, pensions and so forth.


They then look at your nett monthly disposable income, after all deductions were made. For instance, if your gross monthly income is R30 000 per month, the banks will allow you to spend approximately R10 000 per month on a mortgage loan or a bond repayment but only IF your other expenses can accommodate it. 

You may look online for a bond affordability calculator to help you determine the figure the banks may potentially approve. Alternatively you may contact a bond originator to assist with pre-qualification for a home loan. This will give you a very good indication, but remember that the bank has the final say on availability and may include other factors not considered by the bond originator's estimate.

Please note: a poor credit rating will negatively impact your bond application.  Don't think you can hide anything - it will be exposed!

Since your affordability drives the entire home-buying transaction, it is wise to determine your affordability prior to embarking on a house-hunt. Pre-approval will guide you toward looking only at properties you can afford and limits the chance of disappointment when all the banks reject your bond application on the most fantastic, stunning home that you just cannot afford.

Q: May I buy home and sell my current house at the same time?

Yes, you may if you are sure you can afford the consequences if things do not work out as planned.

On the one hand, buying a home before your current house is considered sold, may potentially overextend you financially, having to pay the mortgage, rates and taxes and maintenance of two homes simultaneously. On the other hand, if you sell your current home before you buy another, you may have to rent a home temporarily, until the new transaction is completed successfully. If you are sure about buying a new home before your current home is sold, it is possible to sign an  Offer to Purchase contract with "suspensive conditions." This means the sellers have not only granted you the right to purchase their property, but also accepted your conditions by signing the Offer to Purchase.  The owner will be aware of the condition that the Offer to Purchase depends on your ability to sell your existing home first and may put an expiry date on it. This will enable you to back out of the contract if your current home does not sell in time, but may also mean you may be forced to accept a lower price for your property to make the deal work, if you really want the new property. 

Unfortunately, sellers seldom agree to accept offers with suspensive conditions, especially if they know their property was priced correctly, was in great condition and in a superb location. 

NOTE: Before you do decide to sign an offer with "suspensive conditions", read the contract really well and make sure you understand what it means and what would be expected of you. A contract is binding and not a matter to enter into lightly. 

Q: How many homes should I see before making an offer?

It really is up to you, but finding a home is a strenuous exercise! It may be good to compare a few properties to get to know the local market and the value attached to a certain type or size of property.  However, if you want to streamline the process, it can help to really hone in on a particular neighborhood you're keen on based on your own key criteria; that said, if you feel limited by your options, it may be time to expand to surrounding areas.

Q: What do you think the seller will accept as a fair price?

To offer a few percent less than the asking price of a market-related priced property, is still fairly acceptable, but if a home is priced correctly, offering less than the asking price may proverbially be shooting yourself in the foot because you may lose your dream home if the seller rejects your offer. Also, a lower selling price may benefit your pocket in the short term, but may negatively impact house prices of homes in the area including your future resale price as the selling price is reflected in the Deeds Record. 

However, if a house has been in the market for months on end, you can safely venture below the asking price since the market rejected the asking price as is. You will never know how low a seller will accept, but if the sellers are eager to sell, you may just get lucky and purchase a bargain. 

Q: How do I know if the property is a good deal?

While it may be challenging to determine whether the home you are interested in buying is a bargain or not, researching prices of similar houses currently on the market, will certainly give you peace of mind. There are a number of ways to research property prices: check the main online property portals for the area you want to buy in. Read the advertisements properly and compare yard size, size of the property, rates and taxes and levies to be paid with similar properties such as the one you are considering to purchase. You may also ask your real estate agent whether the property is being offered at a market related price. 

Q: Is there a cooling-off period when I signed an Offer to Purchase on a property? 

Section 29A of the Alienation of Land Act 68 of 1981 applies only if the purchase price of the property is R250 000 or less. This means there is no way to back out of an Offer to Purchase unless the suspensive conditions are not met. For instance, an offer may be subject to the written approval of a mortgage loan by a financial institution, in which case you, the purchaser, are expected to pursue all reasonable sources of mortgage finance and to do everything necessary to procure the granting of the loan. Any non-compliance by the purchaser to pursue all reasonable forms of mortgage finance, will constitute a breach of contract which will entitle the aggrieved party to claim any damages they may have suffered as a result of the breach. 

You are advised not to take the signing of an Offer to Purchase lightly. Most often there is no cooling-off period when purchasing a home, as most houses are sold above R250 000.

Contact Alta, The Property Match Maker, from SEEFF, if you want to buy or sell property in Centurion, South Africa. 

She has a wealth of knowledge and delivers service excellence with flair! 

Mobile: 071 758 0996

alta.nel@seeff.com

https://altanel.co.za

#ALTANEL

What to look out for when house-hunting for your next home

Looking at potential properties to purchase, is quite the adventure! However, there is more to house hunting than you may think...

When you view a home for the first time, it is important to hold your horses, and not to get carried away or too over-excited with what you observe. For sure you should allow yourself to feel your potential new home's vibe, but keep the following in mind before you sign on the dotted line...

• Does the property match the advertisement you saw and responded to?
• Is the location within easy reach of good schools, a hospital and main access roads?
• Does it meet the immediate requirements as well as those within the next 7-10 years?
• Do you know what the permanent fixtures and fittings in the home are? 
• Do you know what plants, pots, special light fixtures or fountains etc. the owner plans to remove when he vacates the property? 

• Do you see or smell damp?
• Did you check the water pressure by opening taps and flushing the toilets? Are the sewage lines not blocked?
• Did you determine where the electrical sockets in the home are and what condition they are in? Sure, the electrician will check and certify the electrical installations, but it remains a good thing to verify the condition for yourself for obvious defects also.
• Did you ask your real estate agent for a list of latent defects for the property that informs you of matters that may need attention, such as a leaking roof or a cracked wall?  The scope of this latent defect list will assist you in your decision to make an offer on the property or not.    

• Is there enough secure parking for yourself and your guests?
• Did you determine the noise level in and around the property? 
• Did you inquire about the neighbours? Are they perhaps noisy? Do they perhaps park on other people's drive ways? Do they keep their yard clean? 

House-hunting sure is exciting! Have fun with it! Beware however, not to make a hasty, impulsive decision when deciding to purchase a home without checking the above pointers, at least. 

While the checklist is very useful to identify potential nightmares, the good news is that all houses are not in bad shape. There really are well-priced, well maintained gems in the market that meet your requirements that you had better buy when you find them! Those ones do tend to FLY off the shelf very quickly... 

Contact Alta, The Property Match Maker, from SEEFF, if you want to buy or sell property in Centurion, South Africa. 

She has a wealth of knowledge and delivers service excellence with flair! 

Mobile: 071 758 0996

alta.nel@seeff.com

https://altanel.co.za

#ALTANEL