Whether you are buying a pre-owned property or a newly-built home, the home loan you will need is what the banks call an “ordinary” loan, and in most cases you will only have about 30 days to confirm to the property seller that your loan has been approved.
It also does not matter if you are a first-time buyer or a repeat buyer, but the size of the loan will depend on the property purchase price and the size of the deposit you are able to put down, and the repayment period will most likely be 20 years, although some banks are willing to extend this to 30 years.
In terms of the National Credit Act, banks cannot let you get into financial trouble by borrowing more than you can afford, but it is a good idea to establish the size of loan you are likely to be granted by obtaining pre-qualification through a reputable bond originator before you go house-hunting, says David Britz, marketing director of leading home developer Multi Spectrum Properties..
“This will enable you to concentrate on properties that are in your price range - and speed up your home loan application process once you have found a home you wish to buy. For pre-qualification you will need three months’ bank statements and salary slips, a copy of your ID and proof of residence, and should expect to have your credit record checked. To apply for a loan, you will also need a copy of the offer to purchase.”
Ordinary loans are available in a couple of variants, the first of which is a variable-rate loan where the interest you are charged fluctuates in line with the prime rate and is thus affected by macro-economic factors like the inflation rate, the rand exchange rate and the petrol price, he says.