Applying for a home loan as a first-time buyer used to be rather daunting, as you anxiously awaited bank approval. These days, you can get a response quicker so that you can focus on the business of house hunting!
Dr Simphiwe Madikizela, head of special projects at FNB Housing Finance, says: “Taking time to understand how banks assess home loan applications can go a long way to helping you increase the chances of getting approval.”
Five tips to help you get your 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. Taking on additional debt or defaulting against credit providers can result in the bank re-pricing 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 from the bank gives you peace of mind about whether or not you qualify for a home loan. Your bank will normally ask for your latest pay slip, three months of bank statements, a copy of your ID and proof of address.
- Checking your credit score
You are allowed to check your credit profile free of charge once a year and you 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.
Source: FNB. Image: Pixabay