House hunting? A prequalification certificate says you are serious about committing to your dream home

Prospective home buyers who obtain a prequalification certificate are doing so much more than just finding out how much they can afford to spend on a house. They are also acquiring a certificate that will build trust between all parties, including the agent and the seller.

Prequalification should be any home buyer’s first step into the house-hunting process. It helps you to make informed buying decisions and then reduces the time you will spend on making the actual offer later.

“Prequalification makes sense for anyone hoping to get a bond to buy a home,” says Bradd Bendall, Head of Sales at ooba. “It gives you the confidence to make the right offer, and gives the seller and agent the certainty that you are a genuine buyer with access to finance.”

What is prequalification?

Prequalification is a service provided a bond originator such as ooba in which your income and expenses are assessed to calculate the monthly repayment you can afford, and therefore the price bracket of property you can buy. ooba also runs a credit check against your name to ensure that there are no judgements (commonly known as “blacklistings”) against you that will prevent you from getting further credit. This process is carried out at no cost to you.

Together, this information will show the likelihood of you obtaining a bond for a specified amount. While a prequalification certificate is not a guarantee that you will get the finance you are hoping for as all banks have different rating criteria and also take into account the value of the property itself, the process will indicate the likelihood of your bond application being approved.

Let your prequalification do all the talking

“Prequalification is an extremely useful process for any home buyer to go through,” says Bendall. “But the certificate does a lot more than just letting you know what you can afford. It also signals to the estate agent and the seller that you are a serious buyer.”

This is because, although prequalification is not a terribly complex process, it does require some time and paperwork. You will have had to produce your ID, proof of residence, proof of income and your bank statements to track your expenses. You will also have to give permission for a credit check to be run.

“If you have done all of this, it makes it clear that you aren’t house hunting on a whim, and already have all the paperwork prepared for the home loan application process – which requires the same documentation as the prequalification process,” says Bendall.

This also means that, should your offer to purchase be accepted, you will spend less time on the application, because the paperwork has already been prepared and submitted.

“This is reassuring for the agent and the seller because it means that you have all your ducks in a row and it is unlikely that there will be any unpleasant surprises in the process,” concludes Bendall.

Hello ooba news

Prospective home buyers who obtain a prequalification certificate are doing so much more than just finding out how much they can afford to spend on a house.

"According to a recent poll conducted by bond originator ooba, three quarters of South African consumers are unaware of their credit profile.

"Many of South Africa's consumers with bad credit records are unable to secure home loan finance to enable them to buy property, according to ooba.

Although 100% home loans are being approved by banks in select cases, potential property owners are advised to save for mortgage deposits, due to the numerous economic benefits for prospective home owners in the long-term.

According to the Credit Bureau Monitor's 2010 4th quarter report only 53.3% (9.90 million) of the 18.51 million credit-active consumers in South Africa were classified as in good standing.