A Solid Credit Record Is Necessary To Get A Home Loan

We are currently experiencing a buyers' market

. The experts reckon that we have a year to get Home Loans before the housing market changes. The upswing thereafter will be fast and furious.

The National Credit Act (NCA) makes it harder to get a loan but homes are cheaper due to a weaker economy. ABSA has done solid research into home loans that shows that a 60% increase in property prices by 2014 is not unrealistic. Your property's value will escalate to R1,5m in four years if you pay approximately R950,000 now.

The NCA has saved South Africans from the worst of the global credit crisis at the cost of making credit harder to get locally. However, it has also increased your control over your credit record by making it possible to obtain it annually yourself. Make sure it is in order before giving it to a bank.

Squeaky clean credit records get home loans fairly easily. Getting yourself to this status will mean looking through it yourself and both identifying and rectifying problems before applying. Your record will determine your interest rate and the size of your loan.

Lessen how much your outgoings are. If you can save R1,300 more a month, you will get R100,000 more on your home loan. Your disposable income can be increased by minimizing all expenses that are not obligatory monthly.

Banks pay for the service of mortgage originators not you. Don't try to do it yourself as getting information on how each bank works is really a very difficult task. The originator understands each bank and knows what paperwork is needed. They negotiate the best interest rates for you and get your home loan registered for you.

Before you go looking for a home, get a pre-approved certificate. It shows that a bank has agreed in principle to give you a loan and will evaluate the property for you. Make sure you budget for rates and taxes, appropriate life insurance and home insurance. Also interest rates will probably move upward by 2% in the near future so consider a fixed rate not a variable one to reduce the chance of sudden increases.

It is your money and your home, and will take you round about 20 years to pay off. It is therefore your responsibility to read up on the process and try to reduce the time you take to repay the loan. In addition, if you know how you can consolidate your debt and pay for expensive items. Interest rates will change from time to time so keep informed on market shifts.

by: Lonnie Master.

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