A bond originator’s guide to getting bond approval

Applying for a home loan is a key step to securing your dream home, and while the thought of being rejected may give you a sinking feeling in your stomach, there are a number of measures you can take that will significantly improve your chance of a home loan approval.

5 Tips for getting bond approval

Businesstech.co.za reported in November 2021 that the pace of mortgage loans has accelerated, and is at the highest level since the introduction of the National Credit Act in 2007.

Increased competition between banks has led to higher home loan approval, including 100% home loans. It’s also led to lower interest rates for home buyers.

So your chances of securing home loan approval are already higher than usual, and you can improve your chances even further with the following tips.

1. Get prequalified

One way to ensure that the loan you apply for will be granted is to get a prequalification. ooba Home Loans will, at no cost, prequalify you for a certain bond amount, or you can use our free, online prequalification tool, the Bond Indicator.

This will provide you with a solid estimate of what you can afford, so you can apply for a bond on a home within your price range. The bank is obviously more like to approve your home loan if you prove you can afford the monthly repayments.

You can also use our Bond Calculator to determine the home loan you qualify for and how much you can expect to pay monthly on your bond repayments.

2. Check your credit record

Your credit record is the most critical factor when attempting to secure home loan approval.

Prequalifying with ooba Home Loans, or using our Bond Indicator, allows you to find out your credit record.

You need a credit score of at least 600 for the bank to even consider your home loan application, while anything above 650 is considered a decent credit score.

There are various measures you can take to improve your credit record, such as paying off outstanding debts, paying bills on time, and cancelling out-of-date credit records. ooba Home Loans can advise you on this process.

3. Submit the correct information

To assist the bank in determining its risk, you will be required to provide personal information such as bank statements, salary slips, a statement of assets and liabilities, a statement of your monthly expenses and information on your employment and credit history, including whether you have ever been insolvent.

At ooba Home Loans, we can ensure you have all the correct paperwork to avoid unnecessary delays. We submit the documentation and liaise with the banks on your behalf.

4. Get the best interest rate

The lower the bank’s risk in lending funds to a particular borrower, the better the rate it will offer that individual.

In calculating its risk, it will consider factors such as the amount of equity you are willing to invest into the property, i.e. your deposit; the size of the loan; and the repayment-to-income ratio (the ratio between the bond repayment and your income).

The size of the bond you apply for, your credit history and the investment value of the property you intend to buy also affect the rate you will be offered.

Shop around and negotiate with various banks to ensure you get the best package. A home loan comparison service, such as ooba Home Loans, can do this for you by submitting your home loan application to multiple banks.

5. Use a home loan comparison service

As mentioned, consumers looking for the best deal on home loans should make use of a home loan comparison service that specialises in shopping around between banks and negotiating the best deal for the customer for free.

By submitting your application to multiple banks, ooba Home Loans also improves your chances of home loan approval, as some banks may have less stringent lending criteria than others.

Even if your initial home loan application was rejected, ooba Home Loans can help secure approval on your next application by submitting it to multiple banks.

We also offer a range of tools that can make the home buying process easier.  Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.