What is a bond originator, and why should I use one?
A bond originator can be very valuable to those looking to purchase their dream home, or invest in property, with a home loan. Their objective is to get you the best home loan deal by applying to multiple banks on your behalf, so you can compare which ones offer the best rates, terms and loan amount. Bond originators are paid a commission by the bank, so their service is free.
How should I compare home loan quotes?
The key things to compare are the interest rate, loan term, and value of the loan compared to the value of the property.
What does a home loan comparison service cost?
A home loan comparison service is completely free of charge to the home loan applicant. Once you've accepted the bank's quote, and the bond has been registered, the bank pays the home loan comparison service, at no cost to you.
Why is a credit score important when applying for a home loan?
Your credit score indicates to your bank whether your past debt repayment behaviour will make you a good risk or not. Through various calculations based on your transactional records, the credit bureau will provide your bank with a three-digit number ranging between 0 and 999. Naturally, the higher the better, and a high credit score rating is one of the most valuable personal finance assets you can have.
Generally speaking, a score of 600+ will give you a fair chance of home loan approval. Although this may vary according to which bank you use. Each bank uses both the Credit Bureau score and their own internal risk assessment criteria which looks at a number of factors specific to a particular home loan application, such as the loan size compared to the property value (zero deposit is considered higher risk). If you are classified as very high risk, the chances are you won't be successful in your home loan application as the banks will question your ability to pay them back. A good to excellent credit score will have the opposite effect, possibly opening the way for you to negotiate preferential terms and interest rates.
Will my partner's poor credit score affect our joint home loan application
Banks are required to comply with the National Credit Act in the granting of credit to applicants, so an impaired credit rating of any of the applicants can affect the outcome of a joint home loan application. The bank's credit decision will depend on the strength of your information and on how often and how severe the listings are on the credit score of your partner. However, if either of you has been blacklisted or is under a formal rehabilitation programme, the banks will not approve the loan as a joint application.
What is a good credit score if I want to apply for a home loan?
Generally speaking, a score of 600+ will give you a fair chance of home loan approval. The better your credit score, the higher your chance of approval, and the more likely you are to get a better interest rate.
Why should I get prequalified for a home loan?
A prequalification gives you an accurate idea of what you can realistically afford, along with your credit score. This means you can shop for a home within the right price range, improving your chances of successfully qualifying for a home loan.
How much do I qualify for?
Your affordability is determined by your monthly income and expenses, the term of the loan and the interest rate. Any surplus (income left over after expenses) every month determines what you can afford as a monthly bond repayment.
What is a good interest rate on a home loan?
The only way to know if you were offered a good rate is to have quotes from multiple banks to compare. In addition, having multiple quotes gives you bargaining power.
Which is better, a fixed or variable home loan interest rate?
If you are working on a tight monthly budget, you might want to consider fixing your interest rate to avoid fluctuating bond repayments. However, fixed rates are usually higher than variable rates, meaning you'll have to pay more in interest over the term of the loan.
Will a deposit get me a better rate on a home loan?
Yes, the higher your deposit, the less risk you are for the bank. A higher deposit improves your chances of securing a more favourable interest rate on a home loan.
What happens if I don't qualify - how often can I reapply?
If you do not qualify, either because of a poor credit score, no credit score, or because you cannot afford the monthly repayments, you have a few options.
If your credit score is the issue, you need to build up a good credit history. If you have no credit score, try opening up some small retail accounts or a cell phone account, and pay it back on time and in full, if not, a bit extra each month. If you have a poor credit score, try settle outstanding debt as quickly as possible, and pay all your bills on time and in full, with a bit extra if you can. And of course, don't take on any more debt, and reduce spending wherever you can. You can check your credit score using the ooba Bond Indicator, online, every 3 to 6 months, to see how your score is improving. You need a score of 600+ to be considered for a home loan.
If affordability is your challenge, it is best to get prequalified, so you know how much you can afford to buy for, and then make sure you look for homes in that price bracket. This should ensure that when you apply for a home loan, you meet the banks' affordability criteria.
Can we apply for a joint bond if we're not married?
You can apply for a bond with anyone you choose: a partner, (even if you're not married), a friend, or with one or multiple family members. Just make sure you have a legal agreement drawn up between the parties in question to protect all of your interests.
Can I, as a South African citizen, buy a property in South Africa from overseas
Yes, you absolutely can. As a South African citizen living and working abroad, bank criteria dependent, you are entitled to between 50% and 80% home loan finance. You would need to supply all the required documentation for a home loan application and undergo the credit assessment set out by the banks. You are now able to complete your home loan application with ooba Home Loans online and submit and sign all documentation electronically.
Can I get a 100% home loan?
Banks are granting home loans without a deposit. The banks will review your credit history, your ability to repay the home loan, and the value of the property to determine if you qualify.
What happens to my deposit if I don't qualify for a bond?
Sales that fall through due to a bond not being approved generally do not see the deposit being lost. But the responsibility is on the buyer to read the offer to purchase carefully to make sure they're familiar with the terms regarding their deposit.
What do the banks look at when considering my home loan application?
The first thing the banks will do is review your credit score. Then they will look at your income and expenses to gauge your ability to repay the monthly home loan instalments. They will also take the size of your deposit (if you have one) into account.
When is my first bond payment due?
The first debit order will go off a month after bond registration (on the debit order date you've selected).
What hidden costs are there when buying a home?
While there are a number of smaller costs to be aware of, your biggest expenses are transfer costs, transfer duties, and bond registration costs. Make sure to include these when calculating what you can afford.
Can I pay my bond off quicker?
Yes, you can pay off your bond as quickly as you choose. If you have a bond of R1 million at a 10% interest rate over 20 years, making a once-off extra payment of R10 000 would reduce the term of the loan by close to seven months and reduce the total loan amount by just over R61 100.
What is a further advance?
If you would like to borrow additional funds and use your home as security, you can apply for a further advance. It is subject to an affordability assessment and a credit check, the same way a new home loan application would be.
These loans are a way for existing homeowners to access the value (equity) that they have built up in their home over time.