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Get your home loan application approved with these tips

  • 9 Sep 2019

For most of us the financial and economic mayhem caused by the 2009 global financial crisis is little more than a distant, mildly painful memory. However, given that the crisis had its roots in the unethical granting of credit by some larger international financial institutions, one of the lingering consequences of the so-called credit crisis is that banks are now a lot more diligent when it comes to checking whether people should be receiving credit or loans, and if so, how much credit they should be getting.

This is according to Xoli Ndwandwe, Head of Affordable Housing at Nedbank Home Loans, who says while these more stringent risk assessment processes have added to the administration involved in applying for a home loan, they haven't, as some people seem to believe, made it impossible for certain individuals to qualify for a bond.

In fact, Ndwandwe says the opposite is true. The one main lesson that banks learned from the credit crunch was the importance and value of a good credit book. And, as such, most banks are very happy to grant loans to people who are able to demonstrate that they can afford to make their repayments and have the solid credit history and reliable income to back up that commitment.

With that in mind, it's worth arming yourself with as much knowledge, information and evidence as possible before you approach your bank for a loan to buy that dream home.

Ndwandwe shares a quick guide to maximising your potential for home loan success, no matter who you are or what type of work you do:

1. Know what options are available

When it comes to home loans, there are essentially three main options available. The ordinary or traditional home loan is your typical finance facility that you can use to buy an established or newly built residential property. Secondly, there's the building loan, which as the name implies, gives you the funding you need to construct your new home or make improvements or extensions to your existing home. Nedbank also offers a third option, called the HomeVision home loan. This home finance solution allows qualifying applicants to register a loan that is higher than the actual amount needed to buy or build the house. The excess amount isn't immediately given to the applicant, but it is available when the property value increases in the future and their affordability levels increase.

2. Who can apply for what?

There's a common misperception that self-employed people and contract workers can't get home loans. This simply isn't true. The banks assess every home loan application on its individual merits, so whatever type of work you do, the most important thing you need to do is demonstrate to your bank that you have a steady and reliable source of income needed to repay your loan.

When assessing your application, the bank will look at the following:

- Your monthly income and how long you have been employed.

- Your typical monthly expenses and how much you are left with to repay your loan.

- Your credit history - have you proven yourself to be disciplined in repaying your debts in the past?

- The value of the property and whether the asking price is a fair reflection of that value.

Irrespective of whether you're employed full time, self-employed or a long-term contract worker, you can maximise your chances of a positive outcome by showing you are serious and committed to repaying your home loan. The best way to do that is by putting down as much of a deposit as you can afford.

While some home loans, like those granted to first-time buyers, may not require a deposit, others do. Nedbank does not necessarily require a large deposit towards the loan, instead the bank values the actual loan at a much higher price.

But whatever type of home loan you're applying for, saving up the money for a deposit is still arguably one of the best ways to maximise the chance you get the funding you need from your bank.

3. Where to apply

While every financial institution may have a few differences in their application processes, for the most part, your application options will include:

- Online

Nedbank offers a secure and paperless, online self-service application. It includes an instant credit and affordability check so that you immediately know what sort of price range you should be looking in. Once you submit your application, you will be informed of the decision within a few hours.

- At a branch

Most banks offer in-branch applications where a sales consultant will help you through the entire home loan application process.

- Home loan consultant

Nedbank also offers a service where a home loan consultant will come to you, at home or at the office, and guide you through the application.

As with so much in life, when it comes to succeeding in getting the finance you need to buy your home, knowledge is power. By following these guidelines, you will greatly enhance your prospects for a positive outcome on your home loan application. And remember, the banks aren't looking for reasons to deny your home loan, they are looking for good reasons to grant it. So, be sure to give them as many of those as you can.

What documents will you need when buying a property?

These may differ from bank to bank depending on your personal circumstances or the property you want to buy or build. For a Nedbank home loan application, you will need to provide at least the following:

Applicants employed full time

- A completed home loan application form, including a list of your income and expenditure, assets and liabilities.

- Copy of identity document(s).

- Copy of signed offer to purchase, except where no sale is taking place.

- Last three months’ bank statements, originals stamped by the bank.

- If commission forms part of your earnings, three months’ pay slips or commission schedules.

- Marriage certificate (if applicable).

If maintenance/alimony forms part of your earnings:

- Latest three months’ bank statements, originals stamped by the bank reflecting the maintenance/alimony payments.

- Copy of the court order.

Self-employed/contract worker applicants

- A fully completed home loan application form, including a list of your income and expenditure, assets and liabilities.

- Copy of identity document(s).

- Copy of signed offer to purchase, except where no sale is taking place.

- Latest financials.

- Latest six months’ business bank statements (original and stamped for non-Nedbank clients).

- Marriage certificate (if applicable).

If applying in the name of a company or CC, you will also need to provide:

- Latest audited financials (accounting officer signed financials if a CC).

- Company documents.

- Auditor’s/accounting officer's letter.


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