How To Qualify For A Mortgage Loan

Since the National Credit Act was implemented and the start of the global economic crisis it has become more difficult to qualify for a mortgage loan from your bank, to qualify for a mortgage loan your bank will require that you meet the following criteria:

• Have a stable steady income , you will need to provide proof of this in the form of a payslip or audited financial statements
• Qualify for the loan in terms of the banks affordability criteria and be able to afford the monthly mortgage payments
• Have a clean credit record , if you have any default judgments or listings the bank will turn down your mortgage application
• The bank may apply additional conditions at its discretion.

The different South African banks may apply different conditions when considering your mortgage application , but these are the core conditions that you should be able comply with in order to qualify for a mortgage loan.

Here are a few pointers and advice on ensuring that you make the best case when applying for a mortgage loan;

Stable and Steady Income

If you are employed and receive a payslip the banks will feel more comfortable in providing you with a mortgage loan. People that are self employed will need to provide the bank with a great deal more information to qualify for that mortgage loan. The bank will require that you provide them with your latest set of audited financial statements as well as 6 months bank statements – the bank wants to satisfy itself that you are able to generate an income to cover your mortgage payments. If your business is still new or not generating the desired level of income it would be prudent to hold off on your mortgage application until you and the business have built up more of a track record.

Banks Affordability Criteria

You have a steady income , but based on the banks affordability criteria you don’t qualify. You could always consider applying at another bank as the various South African Banks have varying affordability criteria , however this is only likely to work in marginal cases as essentially the banks consider the same facts.

You need to identify what the problem areas were in your application and to address these issues. Often applicants are declined because their debt levels are just too high and a significant portion of their income is used to service debt. The only advice here is to reduce your debt levels to acceptable levels before reapplying , you can do this by cutting your expenses and paying off more debt. Always pay off the most expensive debt first and work through your debts systematically. As you pay off more debt increase you repayments on other debt items until your debt levels become more manageable.

Another problem area causing your mortgage application to be declined is that your income is just too low to service the mortgage. Your options are to shop around for a more affordable property that you are able to finance. Another sensible approach is to save towards a bigger deposit making the property more affordable. You can also try increasing your income – tough in these economic times.

Clean Credit Record

This is where most people fall short with their mortgage applications. Before approaching your bank for a mortgage loan always check out your credit profile before applying. You can do this at the major Credit Bureaus , ITC Transunion and Experian – they may charge you for the credit report , but is well worth the expense.

If your credit record has a few blemishes you may need to clean it up before applying for a mortgage loan. Where a creditor lists you as a slow payer, you should get your payments up to date and conduct your account in a more responsible manner. Afterword’s approach the creditor and ask them to remove the slow payer status.

Where a creditor has obtained a default judgment against you the situation become more tricky. You will have to pay the debt in full and ask the creditor for a rescission of the default judgment. Approach the creditor before paying the outstanding amount , make them an offer to pay off the entire amount and costs in exchange for them having the judgment rescinded.

In cases where you have paid the entire debt , but you are still reflected on the credit bureau you should obtain a letter from the creditor stating that the debt has been paid in full. It is always best however to try and get the listings removed as it just makes the mortgage approval process easier.

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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.

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New Home Loans (Absa Bank, Nedbank, Standard Bank, FNB, Sanlam, SA Home Loans)

Buying a home is probably the single biggest investment you will make in your lifetime. It is not only a major financial commitment, but also an emotional experience that normally results in an exciting change in lifestyle.

Whether you are building your own home or buying an established property, you are investing in your future wealth and security needs. Your home could well become the foundation of financial independence for you and your family.

Features

- 100% loan to purchase price.
- The repayment term can be structured up to a maximum of 30 years – note that the general term is usually 20 years.
- The loan term may be increased or decreased at any time, at no additional cost. Your monthly payment however may be affected and could either increase or decrease, depending on the option you have chosen. If your repayment increases, the bank will need to assess that you can afford the new repayment before it can be changed.
- Choose the interest rate option that gives you the repayment structure you prefer – fixed or variable.

With the exception of Group Schemes that provide salary deductions, repayments will be made via a due-amount debit order.
- A larger bond can be registered than the amount of the loan granted.
- Link your home loan to Absa Internet Banking and Telephone Banking for electronic access.
- Further loan amounts may be applied for as soon as your property value increases sufficiently or when you want to extend/improve your property.
- Additional deposits can be made at any stage, which will immediately reduce your interest cost.

Gain immediate access to available funds via the Internet, telephone, ATMs or branches with FlexiReserve.
- Purchase multiple properties and link them to a single account.

Benefits

- No need to save for a deposit.
- Determine your own repayments by having a flexible term.
- By fixing your interest rate, you are not affected by rate hikes for the period which you have opted for.
- Save time and the hassle of having to go and pay your account physically with the due-amount debit order.
- Cut the cost and time when increasing your loan in the future (via a Further Advance).
- Transact hassle-free and cheaper electronically.
- The Further Advance option allows you to finance just about anything from purchasing another vehicle to improving   your existing home at more affordable rates compared to other finance mechanisms.
- You can save by depositing an additional amount into your loan or by opting to pay more than your monthly repayment.
- Have one repayment, one term and an interest rate for multiple properties.

Documentation required when applying for a Home Loan

- Fully completed and signed application forms
- Copy of Identity Document/Passport
- Proof of income
- Copy of Offer to Purchase (including property details)
- 6 months’ bank statements where income is reflected of which the last 3 months must be consecutive (only if applicant if not an existing Absa customer)
- Above also applies where commission is received.

If you want a Home Loan service that cuts through all the usual hassles and frustrations, contact us and we will take care of everything.

Call us now on (011)327-4489

www.mortgagepluscc.co.za