Home Loan Requirements In South Africa

Home Loan Requirements In South Africa

Home Loan Requirements In South Africa

Buying a house is more than just buying a cement building with rooms and a bathroom. Your house is a place where you live, rest, play and build memories, so more than just a building it is your home. When one is on the market to buy your home you have to take many things into consideration, such as how many rooms you require, the area in which you would like to live, where it be a free-standing house or an apartment etc. Then besides the considerations of the actual physical property there are also financial considerations to make.

When searching for that dream home, you need to know what you can afford to buy, and whether you will be able to commit to the repayment of your home loan. Buying a home is a costly expense and very few people would have the lump sum amount on hand to buy the house cash, so we have to take out a home loan from a financial institution. This home loan will then be paid back over a number of years with the addition of interest. Your monthly repayments will depend on a host of factors such as interest rates, taxes, and the loan term just to name a few.

When taking out a home loan, there is a process that the bank goes through to see if you financially eligible for a home loan, whether you would be able to pay back the money you had borrowed. Each bank has its list of requirements which might differ slightly, although here is a list of documentation that you require for your initial application.

The following documentation is required by financial institutions to process your loan application.

Personal details:

Certified copy of I.D

Copy of last pay slip

3 months bank statements

Your income tax number

Proof of physical address

Offer to purchase (signed by all parties)

Additional information for Business Owners, Practising Professional or Partnerships:

Two years financial statement signed by client

Six months business and personal bank statements

Legal docs- CK1 for Closing Corporations and Founding Statements for PTY LTD

Additional documentation for Companies or Incorporated Companies:

Latest audited financial statements

Latest certified financial statements

Bank statements for past three months

This is a list of the documentation you can expect the bank to ask from you when applying for your home loan. Although keep in mind that many banks now use automated credit scoring systems, sometimes these programs could have trouble reading your credit history in which case someone will call you asking you to explain something about your credit history, although this is only for clarification purposes and not a cause for concern. Getting pre-approval from your bank before you go house hunting is a great way for you to be more confident in knowing what you can afford whilst shopping around for your piece of property, or better yet said your new home.

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