- Bond applicants do not get preferential treatment by going direct, as banks are governed by the National Credit Act and lending is regulated.
- Statistics show that you have a far better chance of obtaining the thumbs up on your home loan application if you go through a bond originator home loan comparison service.
- ooba Home Loans, South Africa’s largest home loan comparison service, is successful in securing home loan financing for just about two in every four applications that are initially turned down by a bank.
When the time comes to apply for a home loan, you’d think that your first stop should be applying to your own bank directly. After all, you’ve probably been a loyal customer for years.
In reality, the notion that you will get preferential treatment by going directly to your own bank is a myth, as banks are governed by the National Credit Act and lending is regulated. But there is a bright light at the end of the tunnel for prospective homeowners who have been turned down by their own bank.
My home loan was denied, what do I do now?
“ooba Home Loans is successful in securing home loan financing for almost two in every four applications that are initially turned down by a bank,” says Kay Geldenhuys, from ooba Home Loans, South Africa’s largest home loan comparison service.
In fact, statistics show that you have a far better chance of obtaining the thumbs up on your home loan application if you go through a home loan comparison service such as ooba Home Loans.
A home loan comparison service such as ooba Home Loans will apply to multiple banks on your behalf, which is more effective than applying directly to your bank. Some of the banks may have different lending criteria, making them more likely to grant you a home loan.
Check your credit report
“A homebuyer whose application for home loan finance has been declined by a bank due to a poor credit score should obtain a copy of their credit report from a credit bureau,” advises Geldenhuys. “Should the homebuyer identify errors on the credit report, the credit bureau should be notified of these and the homebuyer should take the necessary action to rectify the information displayed on the report. This will entail engaging with the credit provider who has provided the credit bureau with incorrect data.”
She warns against continuing to apply for credit, apart from home finance, after your home loan application has been declined due to a negative credit score (because your credit report shows that you have not been managing the repayment of your existing debt responsibly) as this could worsen your credit score.
“Every credit application that you make requires the credit provider to check your credit report, and this is then indicated on your credit record. If you apply for credit when you have a good credit score, multiple credit applications will seldom negatively impact your credit score. However, if your credit score is poor, multiple credit applications can negatively impact this even more.”
Work on improving your credit score
If you’re worried your credit score might not be high enough, or you’ve already had an application rejected, fear not, as there are ways to improve your credit score. These include:
- Paying off outstanding debts.
- Settling and closing accounts.
- Paying more than just the minimum instalment on existing debt.
- Avoiding using further credit.
- Ensure your spouse takes the same actions, if married in community of property or applying for a joint bond.
Some of these methods will only take effect in the long-term (in most cases, it will take six months on average to see improvement in your credit score); while others can provide an immediate boost.
Reassess your chances of home loan approval
You can use ooba Home Loans’ free, online tool, the Bond Indicator, to reassess your credit status. The tool will provide you with your credit score, and an idea of what you can afford.
With this information in hand, you can once again apply for a home loan, employing the services of a home loan comparison service such as ooba Home Loans to ensure your application gets sent to multiple banks, increasing your chances of approval.
ooba Home Loans also offers a range of tools that can make the home-buying process easier. Start with their Bond Calculator, then use the online DIY ooba Home Loans Bond Indicator to determine what you can afford, or get your affordability expertly verified by one of ooba’s Property Finance Specialists. Finally, when you’re ready, you can apply for a home loan.
Published on 30 March 2021