Mpho Ramatong, who is the FNB Home Loans Division Channel Head, says it’s important for those who are looking into buying a home to familiarise themselves with common pitfalls that often lead to declined home applications.
Low credit score
This takes into account your credit history until now. Banks often want to know how well you pay your bills and creditors, amongst other financial commitments. This will determine if you would be able to honour your monthly home loan installments or not.
“Before applying for a home loan, check your credit profile and taking corrective measures if necessary. Consumers in South Africa have the right to get one free credit report, once a year, from a registered credit bureau,” advises Ramatong.
We all want to live in lavish houses, however that doesn’t necessarily mean we can afford them. So, when applying for a home loan, banks want assurance that you would still be able to afford the home loan installments 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.
Getting a pre-approval ahead of a home loan application can help consumers determine if they qualify and whether a deposit will be required.
Unsatisfactory property evaluation
It’s essential that the bank assesses the property you intend to buy to unsure it’s in good condition and that the purchase is not far off from its market value.
Unstable monthly income
When applying for a home loan, you’ll be required to produce your latest payslip and three months’ bank statement, as lenders need assurance that you receive regular income.
Self-employed individuals are required to produce a minimum of six months’ worth of financial records or bank statements.
Incorrect declaration of expenses
In most cases applications get declined because expenses might have been duplicated. For example, if you have a credit card that you might be using for petrol and for groceries, you need not include the groceries portion and petrol expenses in your expense.