Many South African home buyers have a misconception about what is required to qualify for a home loan. Most people assume the requirements to buy their first home or even a holiday home is tougher than they actually are.
It doesn’t surprise me anymore when I ask consumers about key home loan criteria such as deposit percentage, debt-to-income ratio, a credit score most don’t know the answer. Unfortunately, this means that there are too many eligible homebuyers who are renting properties in Langebaan because they think they won’t qualify for a home loan.
If you want to make sure you’re ready to buy a home in Langebaan, and reduce any nervousness you have about the home loan process, read the following five guidelines below.
1. Explore low and zero deposit options
The majority of South African adults are unaware of low and zero deposit programs, according to the Venicia Knox, a senior home loan consultant at GPF Mortgage based in Langebaan, Cape Town. “Most banks in South Africa offer zero deposit assistance and homeowner support programs in most areas,” Knox notes.
2. Learn all you can about buying a home in Langebaan
Home loan regulations have changed a lot over the past five years as financial institutions have modified their home loan criteria to accommodate all South African households. For example, certain households can now qualify for a cost-included home loan (also known as 110% home loan). There is a cap on the home loan amount (based on the family’s income), but still, it enables first-time homeowners to buy property in Langebaan.
Also, some buyers could qualify for no-deposit home loans targeted low to middle-income borrowers. More affluent buyers could also qualify for low deposit home loans, so they are not excluded from getting assistance.
3. Talk to a bond originator
Not sure if you would qualify for a home loan? Don’t want to waste your time? No problem. GPF Mortgage can help you to get pre-approved for a home loan as well as helping you understand mortgage terminologies used by banks which will enable you to evaluate your financial situation.
“Our work as bond originators is to help our clients make an informed decision when it comes to buying a house so that they don’t overpay for their home loan over the next 15 or 20 years,” says Knox.
4. Compare home loan quotes
Only about one-third of South African home buyers shop around for a home loan. This means banks are making a killing because the more money you borrow and the higher the interest rate you pay, the bigger the bank’s profits.
“Most people do not shop around for a home loan. And the ones who do have no idea what questions to ask about interest rate “lock-in” periods, legal fees, etc. They are like lambs to the slaughter by a pack of hungry wolves’” comments Knox.
If you don’t shop around for a home loan, you are leaving money on the table. Get a home loan expert on your side to negotiate the lowest rates possible.
5. Take into account long-term costs
Every home buyer knows there are costs involved when you buy a home: your home loan and insurance fees, for instance. There are also unforeseen expenses like replacing a roof. It’s good practice to save money (between 3-5% of the value of your home) so that you don’t have to stress about things going wrong.
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About the author: The above article “5 Steps to Reduce Stress When Buying a Home In Langebaan” was written by Zulika van Heerden, your local Langebaan real estate agent. With over 13 years of combined experience as a real estate agent and mortgage broker, if you’re thinking of buying a home in Langebaan or selling your home in Langebaan, Zulika would love to share her property knowledge and expertise with you.
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