JOHANNESBURG – Mpho Ramatong, the channel head of FNB Home Loans, says first-time buyers can improve their chances of qualifying for a loan by familiarising themselves with the common pitfalls that often lead to home loan applications being unsuccessful:
1. Low credit score – this takes into account the historical management of your finances. Lenders want to know how well you pay your bills and creditors, among other financial commitments, to determine if you would be able to honour your monthly home loan instalments. “Before applying for a home loan, consider checking your credit profile and taking corrective measures if necessary.”
2. Affordability – in some instances consumers opt for properties that far outweigh what they can afford. Banks want assurance that you would be able to afford the loan instalments once expenses have been deducted from your monthly income. “If affordability is an issue, a higher deposit, joint bond application with a spouse or family member, or property of a lower value should be considered,” says Ramatong.
3. Unsatisfactory property evaluation – it is essential that the bank assesses the property you intend to buy to ensure it is in good condition and that the purchase is not far off from its market value.
4. Unstable monthly income – when applying for a home loan you will be required to produce your latest payslip and three months’ bank statement.Self-employed individuals are required to produce a minimum of six months’ worth of financial records or bank statements.
5. Incorrect declaration of expenses – If you have a credit card that you might be using to fill up with fuel and for groceries, you need not include the groceries portion and fuel expenses in your expense.
– BR MONEY