Studies by bond originator BetterBond have revealed that the number of approved home loan applications increased by 4 percent in the last 12 months since April 2018.
Rudi Botha, CEO of BetterBond, attributed this increase to the growing financial stability and preparedness of many borrows. As such, if you want to know how to apply for a home loan in South Africa, it helps identify the primary lenders and the essential requirements.
In this post, we’re going to show you how to apply for a loan for your new home.
Keep on reading to learn more!
Know the Lenders
In South Africa, you can get a home loan through a financial institution such as a bank or via a bond originator. Some of the popular banks for home loans include Capitec, FNB, Nedbank, Absa, and Standard Bank.
Or, you can choose mortgage brokers, such as Ooba, GPF Mortgage, and Bankbonds.
Your choice depends on the interest rates and requirements for each lender.
Choose Your Desired Mortgage
There are three main types of home loans in South Africa. They include:
- Fixed-rate mortgage – The interest rate for this loan is fixed, and it’s not affected by market fluctuations throughout the repayment period
- Variable-rate mortgage – In this type, the interest rate varies according to the current market rate
- Interest-only mortgage – For this loan, you can pay off the interest for a particular period and then pay off the balance in one lump sum at the end of the term
Interest-only loans are difficult to apply for, and nor all banks offer them. Take the time to identify an option that suits your situation and needs best.
Understand the Requirements
Whichever lender you choose, the requirements are likely to be standard. So, you’ll need the following to qualify:
- A clear credit record
- A permanent job
- Adequate cash surplus after paying your monthly expenses
- Deposit payment
Before approaching any lender, ensure that you meet these requirements. The last thing you want is to get a rejection because of something you
Get Your Paperwork in Order
Alongside your loan application, you’ll need to provide the following documents:
- Proof of income
- A valid South African identification
- Schedule of your monthly expenditure and household income
- Stamped bank statements for the last 3 to 6 months
- Proof of address
- Offer to purchase
Ensure all your documents are current and valid to increase your chances for loan approval. If you have never updated your address since your last move, remember to do so.
If everything is ready, submit the requested paperwork to the broker or bank.
How to Apply for a Home Loan – Final Thoughts
These are the crucial steps you need to follow when you want to apply for home loans in South Africa. Make sure you determine the maximum amount you can borrow. Also, determine your monthly payments and any additional fees.
You can also use payday loans to get quick money for unexpected bills and expenses. At LittleLoans, we offer cash loans ranging from ranging from R500 to R8,000, which are payable on your next pay date in one full installment.
Well, you now know how to how to apply for a home loan. If you’re interested in our services, get started with our instant loan application.