- Pre-approval grants you a solid idea of what you can afford, allowing you to house hunt with confidence.
You can get pre-approved online by using tools such as the ooba Bond Indicator, which provides a quick, simple, DIY, user-friendly experience.
- The Bond Indicator will require you to enter some information about your finances, which it will use to determine your affordability, and calculate the size of the home loan you are likely to qualify for.
- It will also do a credit check, to determine your credit score.
- Once the process is complete, you will be issued with a prequalification certificate, which shows sellers that you are a serious buyer.
It’s always best to be prepared, especially when making a financial commitment as significant as that of buying a home. Here’s how getting home loan pre-approval online can help you streamline the home-buying process.
Why get home loan pre-approval online?
Home loan pre-approval requires you to go through a prequalification process, during which you provide certain financial information, which is then used to calculate the size of the home loan you likely qualify for. You will also be provided with your credit score as part of the prequalification process.
It may seem like unnecessary extra work, but it’s incredibly useful to have this information available to you. Here are some of the reasons why prequalification is in your best interests:
- It provides you with an idea of what you can afford, so you can house hunt with confidence. You don’t want to settle on a particular home after a long search, only to find out later that you can’t afford it.
- It provides you with your credit score, which the banks will use to determine how much of a risk you are. Your credit score indicates to the bank whether your past debt repayment behaviour will make you a good risk or not.
- It provides you with a prequalification certificate, which you can then present to an estate agent to prove you’ve done your due diligence and that you mean business.
- The seller of the home is more likely to do business with someone who already has a strong indication, in the form of pre-approval, that they can afford the home.
You have the option of contacting a bank or bond originator directly and getting pre-approved by an expert, but it’s quicker, simpler and easier to do it online yourself. Here are three easy steps to doing so:
1. Find a home loan comparison service
A home loan comparison service will usually provide the option to apply for pre-approval, but some home loan comparison providers are more professional than others. Since they can also apply to multiple banks for a home loan on your behalf, you’ll want to choose a home loan comparison service that has a good relationship with the banks and is willing to fight your corner when negotiating with banks.
In terms of prequalification, you’ll want a service that makes the process simple and straightforward. For example, ooba home loans, which is South Africa’s leading home loan comparison service, provides a free, DIY, online tool, the Bond Originator, which will take you through the pre-approval process step by step, in the comfort of your own home.
2. Provide them with the necessary information
The pre-approval process will require you to provide personal and financial information that will enable the prequalification tool to calculate your affordability, and to check your credit record.
Steps to pre-approval using the ooba Bond Indicator are as follows:
- Open the ooba Bond Indicator: indicator.ooba.co.za
- Register by providing your personal details, and confirming a password, chosen by you.
- Enter your cellphone number, and confirm your number via a one-time PIN that will be sent to your cellphone.
- Verify yourself by providing your ID number, and by answering some security questions.
- Your credit score will be retrieved.
- Provide information on your monthly income and expenditure, including any credit accounts and monthly charges you may have, as well as outstanding loans.
- The tool provides you with three options to capture your financial information: Upload your bank statement, import your statement by securely connecting to your internet banking profile, or manually capture your income, deductions, and expenses.
- The Bond Indicator will use this information to provide you with a realistic indication of what you can afford.
The process is safe, simple and secure.
3. Prequalification certificate
Once you’re done, you will be issued with a prequalification certificate, that you can present to an estate agent or home seller. The certificate is valid for 90 days, after which you’ll be contacted by the home loan comparison service to ensure that your financial situation hasn’t changed in any way, before offering you the option to prequalify again.
Bear in mind that the prequalification certificate does not guarantee that the bank will provide you with a home loan. They will still need to perform their own affordability and credit checks, and evaluate the property you’ve decided to purchase so they can take its value into account.
But thanks to pre-approval, you will have chosen a property very likely to fall within your financial means, and thus improve your chances of obtaining a home loan. Since you will also know your credit score, you can decide whether you should focus on improving your credit score before applying for a home loan.
Applying for a home loan
Once you’ve gotten pre-approved, and found a property that is within your means, you can enlist the services of a home loan comparison service such as ooba home loans to help you apply for a home loan. Since they apply to multiple banks on your behalf and compare interest rates, they could secure a home loan deal even better than the one you thought you would get based on your pre-approval.
They also offer a range of tools that make the home buying process easier. Start with their bond calculator; then use their free, online prequalification tool, the ooba Bond Indicator, to get prequalified and determine what you can afford. Finally, when you’re ready, you can apply for a home loan.
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