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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Keep Your Cool When Lenders Ask Questions

More and more financial institutions rely on automated credit scoring systems when making lending decisions, but even these sophisticated systems can have trouble processing certain parts of your credit history, and it’s then that you’re likely to get a call from a human asking for an explanation.

“But this is no reason to panic about not getting the loan,” says Berry Everitt, CEO of the Chas Everitt International property group, “and certainly no time to get defensive and hot under the collar.

“You may well have been very good about keeping your credit rating up by never borrowing more than you could afford and always paying your bills. But it is also quite possible that in the past few years you have made some payments ‘late’ and that these are showing up on your record.

“It is important to understand that what credit bureaux and banks regard as ‘late’ payments are those made more than 30 days after the due date on the account, and that most will require an explanation for such incidents, even if they seem minor to you.”

The best course in these circumstances, he says, is always just to tell the truth. “For example, if you genuinely can’t recall why the monthly payment on a store card was made late once two years ago, say so. If you missed paying a telephone account because you were away on holiday, say so. Be honest if something happened that made you forget to post a batch of cheques one month.

“This sort of thing happens to everyone, and banks generally don’t expect a perfect credit record. Usually what they want is just to obtain a reasonable explanation from you that they can fill in opposite any credit query that their automated system has thrown up.”

Everitt says that those with really big credit problems in their past, such as bankruptcy or home repossession, should also be totally honest about it – and provide a full, detailed and documented explanation to their bank or originator before applying for a new loan.

“They should know that there is still a good chance of getting a loan if they can show with third-party verification that what happened was beyond their control – because of an accident, for instance, or because of a sudden serious illness or the loss of a job – and that their circumstances have now changed for the better.

“On the other hand, there is virtually no chance of a loan if they try to hide the earlier problems and they emerge during the bank’s application evaluation process.”

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