How to prequalify for a home loan & boost your approval chances

Article summary

• When applying for a home loan, pre-qualification significantly improves your approval odds.
• This free assessment provides clarity on your credit standing, confirms what you can afford, and gives you a certificate that strengthens your application.
• Most importantly, 90% of ooba’s pre-qualified applications receive bank approval, making it an essential first step in your home-buying journey.

What is home loan pre-qualification?

Home loan pre-qualification is a preliminary assessment of your financial situation conducted by a home loan comparison service like ooba Home Loans. This process evaluates your financial health using the same criteria banks use when reviewing home loan applications.

During pre-qualification, we examine:

– Your credit score and credit history.
– Your income and employment stability.
– Your existing debt and monthly expenses.
– Your affordability based on current interest rates.

After completing this assessment, you’ll receive valuable insights about your creditworthiness, loan approval probability, and your likely home loan budget range.

Benefits of pre-qualifying for a home loan

1. Understand your credit standing

Pre-qualification provides insight into your credit record—the most important factor banks consider when assessing home loan applications. A credit score of at least 610 is typically needed for home loan approval. Knowing your score early allows time for improvement if necessary.

2. Determine your affordability

Pre-qualification gives you a realistic estimate of what you can afford based on your income, expenses, and current interest rates. This prevents wasting time viewing properties outside your price range and helps focus your property search effectively.

3. Strengthen your offer

A pre-qualification certificate demonstrates to sellers and estate agents that you’re a serious buyer who has already taken steps to secure financing. In competitive markets, this can give you an edge over other potential buyers.

4. Increase approval chances

Statistics show that 90% of home loan applications pre-qualified by ooba Home Loans are subsequently approved by the bank. This dramatic increase in approval odds makes pre-qualification one of the most valuable steps in the home-buying process.

5. Streamline the application process

Pre-qualification identifies potential issues early, allowing you to address them before submitting a formal loan application. This leads to faster processing times and fewer complications during the official application.

How to prequalify for a home loan: Step-by-step process

Option 1: Online pre-qualification tool

1. Register and login: Visit our website and register to use our free online Bond Indicator tool.
2. Enter your information: Provide details about your income, expenses, and existing debt obligations.
3. Review your results: Within minutes, you’ll receive a pre-qualification assessment showing your credit status and what you can likely afford.
4. Download your certificate: If successful, you can download your pre-qualification certificate to use when house hunting.

Option 2: Guided pre-qualification with an expert

1. Contact ooba Home Loans: Reach out to us via phone or our website to be connected with a home loan expert.
2. Document Submission: Prepare and submit the following required documents:
   – Signed pre-qualification form
   – Copy of your ID
   – Latest payslip
   – Recent bank statements (usually last 3 months)
3. Financial Assessment: Your consultant will assess your financial situation and credit profile.
4. 4. Receive Your Certificate: If you qualify, you’ll receive a pre-qualification certificate valid for 90 days.
5. House hunting guidance: Your consultant will explain your affordability and guide you on the next steps.

Requirements for home loan pre-qualification

Essential documents

– South African ID or valid passport.
– Proof of income (latest payslip or 3 months’ bank statements for self-employed applicants).
– 3 months’ personal bank statements.
– Proof of address (utility bill not older than 3 months).

Financial requirements

– Credit Score: A minimum score of 610 is generally required.
– Income Stability: Consistent income for at least 3-6 months.
– Debt-to-Income Ratio: Your existing debt payments should ideally not exceed 30% of your gross monthly income.
– Employment status: Permanent employment improves your chances (though self-employed individuals can also qualify).

What If You Don’t Qualify?

If you don’t pass the pre-qualification assessment, don’t despair. This early awareness is valuable as it:

1. Identifies areas for improvement: You’ll learn exactly what needs to be addressed before applying to the bank.
2. Prevents wasted application fees: You avoid paying for applications that would likely be rejected.
3. Provides a roadmap: ooba Home Loans can help you develop a plan to improve your application, which may include:
   – Credit score improvement strategies.
   – Debt reduction planning.
   – Savings accumulation for a larger deposit.
   – Documentation organisation to strengthen future applications.

Frequently asked questions about home loan pre-qualification

How long is a pre-qualification certificate valid?

Pre-qualification certificates are typically valid for 90 days. After this period, your financial situation may have changed, requiring a fresh assessment.

Is pre-qualification the same as pre-qualification?

No. Pre-qualification is an initial assessment of your financial readiness, while pre-qualification is a more formal commitment from a bank indicating they’re willing to lend you a specific amount.

Does pre-qualification affect my credit score?

No. The pre-qualification process involves a “soft credit check” that doesn’t impact your credit score.

Can I pre-qualify if I’m self-employed?

Yes. Self-employed applicants will need to provide additional documentation, such as financial statements and tax returns, to verify income stability.

How much does pre-qualification cost?

ooba Home Loans offers pre-qualification services completely free of charge.

Additional Resources

– How to improve your credit score
– Understanding home loan affordability
– First-time home buyer’s guide
– Documents needed for home loan applications
– Understanding interest rates and bond repayments

Start Your Pre-qualification Today

Pre-qualifying for a home loan takes the guesswork out of the home-buying process. It provides clarity on what you can afford, improves your chances of loan approval, and gives you confidence when making offers on properties.

Get Pre-qualified now:

– Use our free online Bond Indicator tool for instant results.
– Contact our experts for personalised guidance through the process.

Don’t leave your home loan approval to chance. Take this important first step today and shop for your dream home with confidence.

GET PRE-QUALIFIED NOW

ooba Home Loans is ranked #1 in Banking on Hellopeter with an average rating of 4.86 from over 4,550 reviews.