What do you need to apply for a home loan

There is nothing better than a good credit score and “ clean” credit record without arrears, defaults and judgements if you want to apply for a home loan.

One thing is clear – if you have a low credit score, with defaults or judgements on your credit report, your chances of  getting  approved for a home loan are are slim – to none. Rather look at increasing your credit score, by getting your account payments up to date and relook the possibility of buying in a few months time.

However, if you are have a good credit score and a deposit,  then according to banks and major lenders,  you will need the following to apply for a home loan:

If you are employed:

• 3 months latest salary slips
• 3 months latest stamped personal bank statements
• Copy of your ID document
• Copy of marriage certificate or ante nuptial contract (ANC)
• Copy of the offer to purchase  (OTP).

If you are self-employed:

• Proof of income:  This needs to be a letter of drawings from an accountant
•  6 months latest stamped personal bank statements
• Personal assets and liabilities statement
• Latest stamped 6 months business account bank statements
• Latest 2 years annual financial statements
• Where annual financial statements are older than 6 months to date, current management accounts not older than 2 months signed by the applicant and accountant must be provided in addition to the annual financial statements
• Copy of your ID document
• Copy of marriage certificate or ante nuptial contract (ANC)
• Copy of registration documents or trust deed
• Copy of the offer to purchase (OTP)

It’s clear from this, that you really need to have all your ducks in a row, if you are self-employed and want to apply for a home loan

Use of bond originators

When you are ready to apply for a home loan, you might want to uses the services of a bond originator.

A bond originator is basically the person between an applicant (you) and the various banks that they submit your application to. What is nice about a bond originator, is that if you are nervous about dealing with banks – they will do all the work for you. You only have to fill out one application form, and your bond originator will submit it to anywhere from 3 to 8 banks. You will then have offers to compare. Banks will rate you differently on what they deem to be your risk, so your offers on interest rates may differ.

Contrary to what some believe – you (as the person applying for the home loan) do not pay the bond originator. Their services to you are free. The bank pays the bond originator a commission if you take up their offer. The bond originator’s  commission does not get added into your home loan interest rate.

Bond originators  make the process of applying for a home loan much easier and less stressful. They are easy to find on the internet and most of their websites have easy to follow prompts and tools to assist you upfront with your eligibility and affordability of a home loan.

Expenses to plan for when buying a home

There are quite a few expenses that need to be factored in, and planned for when buy a home

• Bond registration, transfer costs and other attorney costs: Make sure to mention this to your agent/ bond originator/ bank consultant so that you have an idea of what amount you are looking at.
• Moving costs: If you are looking to make one big move, compare the prices of moving companies. Sometimes the rates during the middle of the month are lower than at month end.
• General repairs of the new house: Even if you move into a brand new house, you are going to want to clean it. Factor in the cost of detergents and cleaning materials. If the house isn’t brand new, put away some money for some inevitable touch-us which will have to be done.
• Getting connected: Put money aside for telephone, electricity and internet connection etc.
• Security and alarm system: Enquire with the other people in the area that you are buying in, what they spend on securing their properties.
• Insurance: Make sure you have insurance in place for the structure of your home as well as the contents.

Home loans and debt review

Most people go under debt review with the main purpose of rehabilitating their credit report and then applying for a home loan. Debt review is the perfect solution if you are committed to becoming debt-free, having a clean credit record and starting anew. Just because you have made some financial mistakes does not mean that you have to pay for them for the rest of your life. Clear your credit record and buy your own home – you deserve it!