Embarking on the journey to homeownership is both thrilling and challenging. One of the critical steps in this process is applying for a home loan. Navigating this process can be smoother and more successful if you’re well-prepared.

Here are five essential things you need to do before applying for a home loan:

1. Maintain a strong credit record

Your credit record plays a pivotal role in the home loan approval process. Lenders want to know that you will repay the home loan. How you’ve managed your debt in the past shows lenders whether or not you are financially responsibility and if you have managed your previous debts well. A solid credit history can significantly boost your chances of getting a home loan approved.

Here’s how you can ensure a good credit record:

• Pay all your bills on time, including credit cards and utilities.
• Keep your debt levels manageable.
• Regularly check your credit report for accuracy, and address any discrepancies.

In South Africa, you are entitled to one free credit report annually from each of the major credit bureaus. Reviewing your credit report before you apply for a home loan can help you spot and correct any issues that might affect your application.

2. Have secure, stable employment and income

Lenders want assurance that you have a reliable income source to manage the monthly repayments on your home loan. Typically, you will need to provide:

• Payslips for the last three to six months.
• Bank statements for the same period.
• For self-employed individuals, audited financial statements and a letter from your accountant confirming your income.

If you are submitting a joint application with a spouse or partner, both parties will need to provide the above documentation during the application process as the banks or bond originators will assess your affordability based on both incomes.

Having a stable job and consistent income shows lenders that you have sufficient, regular income, and thus the ability to pay your debts. A full-time, steady job indicates that you are a low-risk borrower and increases the chances that your home loan application will be approved.

3. Save for a Deposit

While it’s possible to obtain a 100% home loan in South Africa, having a deposit can significantly improve your approval chances of securing a bond, and it can reduce your monthly repayments. Having a deposit shows you are prepared for and committed to homeownership. It is recommended that you save around 10% to 20% of the property’s purchase price for the deposit.

By contributing a deposit, you reduce the amount you need to borrow, which can lead to lower interest rates and more favourable loan terms.

4. Gather Proof of Identity, Marital Status, and Residence

To process your home loan application, lenders will need to verify your identity and current address. This step ensures compliance with legal requirements and confirms your details. You’ll need to provide:

• A valid South African ID or passport.
• A copy of your marriage certificate, and confirmation of the type of marital contract, e.g., whether you were married in community of property, or whether you were married antenuptial with accrual.
• Proof of residence, such as a recent utility bill or lease agreement showing your current address.

Having these documents up to date and readily available will help to streamline your application process.

5. Obtain a Pre-Approval Certificate

Securing a pre-approval certificate from a lender can give you a competitive edge when house hunting. A pre-approval certificate indicates that you qualify for a home loan up to a certain amount, based on an initial financial assessment. This certificate:

• Provides a clear understanding of your budget for purchasing a property.
• Shows estate agents and sellers that you are a serious buyer with financing in place.
• Can expedite the final approval process once you’ve found your dream home.

To get pre-approved, you will need to submit the documents mentioned above, to your lender for an initial evaluation.

Let us help you by taking the hassle out of financing your new home

Applying for a home loan in South Africa doesn’t have to be daunting if you’re well-prepared. By ensuring you’ve followed the five essential steps mentioned above, you can significantly enhance your chances of getting your home loan application approved, bringing you closer to the dream of owning your home.

At Transafrica Property, Finance and Legal, we believe everyone deserves a place to call home. We’re here to make your home loan application journey as smooth as possible for you. We have streamlined the application process to take the hassle out of home financing, so contact us today and let us help you secure the home you’ve always wanted. 

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