Top Tips for Getting Your Home Loan Approved

The decision to finally purchase your dream home - probably making the most significant investment of your life - can be paired with a fair amount of stress over whether your bond is going to be approved or not, and with banks applying stricter lending criteria many potential buyers and sellers are faced with anxiety during the purchase process.

“It takes time to build a good credit rating, and with the right amount of dedication to your financial wellbeing, applying for a home will only be a rewarding and exciting experience,” says Gray.

This is according to Richard Gray, Harcourts Africa Chief Executive Officer, who says there are guidelines you can follow to help you improve your chances of getting that bond approved.

“Your credit record is of utmost importance,” says Gray.

“If you’ve been meticulous about paying off your credit cards, retail accounts, loans and cell phone accounts, you have a better chance of having your home loan approved.”

He says banks always consider your credit history and risk profile to determine your affordability as well as gauge diligence in paying accounts responsibly. Defaults on payments reflect in your credit rating and this can influence your loan eligibility.

It may seem responsible to remain debt-free, but unfortunately, Gray says the banks have no other way of assessing your financial records when you apply for a bond. Therefore, having some debt, which you have to pay responsibly, is useful and will help you build up a credit score.

“Don’t apply for needless debt and reduce credit limits where you can to ensure you are not overextended financially and soon have to lend from Peter to pay Paul,” says Gray.

“Staying informed about your financial status will assist you in assessing your affordability, so it is strongly advisable to apply for a free credit report annually.”

Together with information, he says research is a step that cannot be left out of the equation.

An online affordability calculator and bond and transfer costs calculator will assist you in finding out what monthly bond expense you can expect on your home loan, as well as what your registration, bond repayments and transfer costs will be.

This way you can calculate your budget ahead of time to truly evaluate your affordability and approval success. In addition, you can contact a bond originator to get a pre-approval, which will let you know how strong your chances are of getting that home loan approved, and what you can afford.

“It takes time to build a good credit rating, and with the right amount of dedication to your financial wellbeing, applying for a home will only be a rewarding and exciting experience,” says Gray.