When applying for a mortgage bond, your credit record is of utmost importance. If you’ve been meticulous about paying off your credit cards, loans and cell phone accounts, you have a better chance of having your home loan approved.
Harcourts Africa CEO Richard Gray advises first time home buyers that 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. With banks applying stricter lending criteria many potential buyers and sellers are faced with anxiety during the purchase process.
There are guidelines you can follow to help you improve your chances of getting that bond approved.
Banks always consider your credit history and risk profile to determine your affordability as well as to gauge diligence in paying accounts responsibly. Defaults on payments reflect in your credit rating and this can influence your loan eligibility. So check your credit rating.
It may seem responsible to remain debt-free but unfortunately 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 borrow from Peter to pay Paul.
Together with information, research is a step that cannot be left out of the equation. Bond originator Ooba has an affordability calculator and bond and transfer costs calculator on its website that will assist you in finding out what monthly bond expense you can expect on your home loan. It will also assist you as well in finding out 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 Ooba to get a pre-approval, which will let you know how strong your chances are of getting that bond approved, and what you can afford. The facility is also on their website.
It takes time to build a good credit rating and with the right amount of dedication to your financial well-being, applying for a home will only be a rewarding and exciting experience, says Gray.