Before applying for a home loan you need to make sure you are properly prepared and have your expenses under control.

To improve your chances of being approved for a home loan, you should try not to take on any other big debts in the six months before you apply.

This is the advice of Hano Jacobs, CEO of the Realty 1 International Property Group. “Banks don’t like to see too many recent requests for credit clearance on your record, so this is not the time to buy a new car or furniture on a hire purchase agreement.”

“In fact, you might even think twice at this stage about taking out a new cell phone contract or applying for a new store card,” he says.

Home buyers should also do their best not to change jobs while in the process of applying for a home loan. “Lenders look for employment stability, so if your reason for moving house is to take up a new position, you will need confirmation of this from your new employer to accompany your home loan application, in addition to your salary records from your current job,” says Jacobs.

He warns that home buyers should not try to conceal anything in their financial past from the lender. “If you have borrowed the cash to pay the deposit and will have to repay it, say so. If you have had credit problems in the past, admit to these too.

“Today’s sophisticated credit checking systems will inevitably reveal the whole story, and once lenders find you have been less than truthful about one thing, they will naturally start to question the rest of your home loan application and once that happens, the chances are very good that it will be declined.”

Two further pieces of advice for home buyers, he says, are not to go on a spending spree for a new home if their home loan application is approved, and not to proceed with an application if a change in their circumstances means they will not be able to afford the repayments.

Some additional expense on a new home is to be expected, says Jacobs, but buyers should resist the temptation to splash out and deplete their cash resources at least until they have taken transfer and established the actual running costs of their new home.

“And if something should happen that makes a big change to your financial picture, such as a disabling accident or a retrenchment, for example, it is not a good idea to proceed with an application in the hope of securing the loan before the bank finds out what has happened,” says Jacobs.

He advises that if there is a good chance you will not be able to repay the debt, you should rather withdraw the application – and keep your credit record intact.

Mortgage Plus offers a wide range of advice on different bond options and further advice on the above. Please call us for further information on:

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Email: morne@mortgagepluscc.co.za

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Mortgage Plus have created a series of Questions and Answers about Originating, Home Loan Products, finance and more!

What Is Bond Origination?

Bond originators give you independent advice on choosing a home loan and help you obtain it without the hassle of doing all the legwork yourself – we answer some commonly asked questions.

What is mortgage origination?

Basically, it is the business of negotiating on the behalf of a prospective property owner, a home loan with a bank.

Why do I need a mortgage originator?

Because your home purchase is probably the most expensive one you’ll make in your life, the home loan itself is an im portant financial decision and the benefit to be gained from making a correct choice can amount to savings of hundreds of thousands of rands over the life of the loan.

Is choosing a home loan really that difficult?

All home loans differ from one another and each bank may evaluate your worth differently, so it is not as simple as shopping around for what appears to be the best interest rate in the market. Each bank has varying credit policies that cater for different claim circumstances. Mortgage Plus has knowledge of all banks’ products and will advise you on the type of loan that best suits you. They will negotiate with the banks on your behalf to get the best rate for that product.

I’ve heard that this service is free – how so?

Indeed, the service is free for the home buyer. Mortgage Plus receives a fee from the bank for doing the groundwork on the loan and thereby reducing the bank’s costs. The bank is, by law, not allowed to add this cost to the amount of the loan, so you won’t pay more than if you approached the bank yourself.

Isn’t it easier to just get my home loan from my regular bank?

Your bank will encourage you to keep all your finances under one roof, so to speak – but at what cost? Because Mortgage Plus originates loans for all major banks, this offers you, the buyer choice and by being able to compare various products and rate offers, you get the best home loan deal in the end.

How do I know if I’m getting good advice?

The professionalism of the originator will quickly become evident, so make sure you are dealing with someone who can explain their recommendation clearly and are credible. Check their track record and only deal with an originator that is a member of the National Association of Mortgage Originators (NAMO).

Must I accept any of the packages they offer?

No – you have not entered into an agreement with the originator, other than to give them the information they need to get quotations from the banks. You still make the final decision whether or not to accept their offer.
Once I’ve accepted their recommendation, what happens?
Mortgage Plus will submit your applications together with the relevant documentation, such as copies of your ID and salary advice, to the bank agreed on and advise you once your loan has been approved. A good originator should also keep you informed all the way through to registration and liaise with the conveyancing attorney on the loan’s progress.

Types of Home Loans

The leading banks usually offer the types of home loans listed below. These types of home loans are also used in the case when you have an existing home loan and need additional funds. Read more about Further Loans.
Your Mortgage Plus consultant will help you choose the option that best suits your needs and help you through the application process.

Variable Rate Home Loan

With a variable rate home loan, your interest rate is linked to the base home loan rate which moves up and down depending on market conditions. If the base rate decreases by one percent, so will your interest rate, and of course if the base rate increases so does your home loan rate.

Fixed Rate Home Loan

Here your interest rate is fixed for a specified period, normally between one and two years. Generally the fixed interest rate will be slightly higher than the base home loan rate when the loan is taken out. A fixed rate loan protects you from rising interest rates and gives you the certainty of knowing exactly what your payments will be. However it does not allow you to benefit from any decreases in the interest rate over the fixed period.

Capped Rate Home Loan

This type of home loan allows you to benefit from any decrease in interest rates, but has a maximum rate built in so you never pay more than the capped rate. These loans are not always available from banks, and generally the qualifying criteria are more stringent.

Remember by choosing us for a loan, you will get professional advice to make sure you are getting the best deal possible.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za