Home Loan Qualification Criteria for first time home buyers

Home Loan Qualification Criteria for first time home buyers

home loan qualification criteriaIf you have recently thought that you no longer want to waste money on paying rent and you would rather use the money to pay into a home loan then it is possible to do so. For your own purposes, using the mortgage calculator will give you an idea of what the payments will be according to the amount you wish to loan for the purchase of your new home. Continue to read the home loan qualification criteria to see what your chances are of getting the loan you need.

There are factors and criteria that are required to qualify for a home loan. This means that the bank needs to know that you are able to pay money towards the loan every month. Therefore proof of a job, the amount you get paid and how long you’ve worked at the company or if you are self employed you need to at least have 2 years proof, your ID is also important. As the bank needs guarantees, you would need to fit into a certain income bracket to qualify for a home loan which is calculated according to your means.

There are two options for first time buyers: 1.If you have money that you can put down as a deposit for a home loan or 2. you do not have a deposit and you qualify for a home loan then the bank can grant you over a 100 percent loan.

In order to determine the amount you will pay the bank back every month is based on the interest rate.  If you have money and you put a deposit down depending on the amount of the deposit in ratio the cost of the house; the bank will calculate a percentage using a loan to value ratio. This ratio refers to the amount of the bond that you’re applying for and the cost/value of the property you want to purchase.  The percentage that is calculated will determine the amount which will become part of the interest rate you pay every month.

The minimum bond you can apply for is between R100 000 and R150 000 so if your LTV which is your Loan To Value ratio is calculated at a low percentage this means that the interest rate will be low as well; as it is directly proportional to the interest rate in other words the lower the LTV percentage the lower the interest rate will be to pay the bank back each month.

If you do not have a deposit then you can ask for a home loan that covers everything. Often first time home owners do not have extra money to put down as a deposit so therefore the bank makes provision for this. A bond for over a 100 percent normally 110 percent bond will cover the cost of the home and other home loan expenses including transfer fees for example.  As there is always a time period associated with applying for a bond the norm in this case would be thirty years. As terms and conditions vary inquiring at a bank or using findbond.co.za can assist you with your requirements and needs.

Investing in your own home means that you can renovate or build on to your home as you like and you have the financial aid to do so. Many banks or financial institutions have requirements in order for you to qualify therefore making sure that you have a reliable and stable form of income is the first step to take to qualify for a home loan.

Home loans, what are the options

Home loans, what are the options

After years of renting an apartment you have decided to purchase a house. You are earning a good income and you would like to inquire about a home loan. What various bonds are available and which should you choose?

When requesting a bond you should consider what you want and what the bank will grant you. Accessibility to money in your bond and a hundred percent loan are obtainable from your bank should you have the financial security to pay the bank back. South African banks offer various home loan options therefore contacting your bank will be the next step.

As there are different types of bond options they are formulated based on the interest rate. The following are different kinds of loan options available from your bank:

Variable rate home loan is dependant on what is called a repo rate which is the lending rate offered by the South African reserve bank to other banks. Should the rate increase or decreases it will effect your bond payments accordingly.

Should you find that you are prepared to pay a set amount of money towards your bond then a rate that is fixed will be more suitable. In this case rate increases does not affect you and the monthly payment you make to your financial institution is consistent. This means that you are unable to benefit from a declined rate.

Should you however feel that you require a bond that meets a variable rate and a fixed rate then choosing a bond that is capped will suite your needs. This means that you repay your home loan at a different amount and you benefit from paying a lower loan rate amount should the interest rate decrease. To apply for this type of bond you would have to meet certain requirements.

Another option to consider is a bond that reduces its rate within six to twelve months. The lower rate is not dependant on the repo rate. This application is similar to changing your bond by doing so you can benefit from a lower rate. It is considered to be an effective way to conserve money and shorten the time to pay off your bond.

In South Africa people are fortunate to apply for a bond to finance their home or business. Certain requirements and financial records are presented to the bank from which they will ascertain for which bond you will qualify and the amount they will provide you with a home loan or business loan.

In order to benefit from the best option you can find a home loan mortgage broker to assist you with a bond that suits your requirements. FindBond.co.za will provide you with information on bond application, home loans and debt management. By Adriana Levi

Second bonds

Second bonds

Applying for a second bond is primarily intended for home improvements and not to be confused with accessing equity available in your bond for other reasons like dealing with debt or purchasing other assets.

If you have had your bond for some time and wish to access the equity available, in most cases the bond can be converted to an access type bond which essentially gives you access to the capital amount you have paid off on your bond and you will be able to transfer it without limitation.

If you need to make additions or alterations to your home that will add value to the existing property, you can apply for a second bond to cover the construction costs.

The process of applying for a second bond is exactly the same as applying for a first bond where the bank assesses your ability to make the repayments, the value of the property before the alterations or additions and the value after the improvements. They will then lend a portion of the increase in value to embark on the project subject to certain terms and conditions.

Using a bond originator is recommended in applying for a second bond. It may be an option to move your existing bond from one bank to another at a better interest rate with fewer conditions than to simply accept what your existing bond holder offers.

Remember that a small difference of ½% in the interest rate can mean hundreds of thousands of savings over a long period, so explore all of your options before signing for a second bond and of course a bond originator costs you absolutely nothing.

What does using a bond originator cost

What does using a bond originator cost

The straight forward answer is no. A bond originator works entirely on a risk basis and if a bond application is successful, the approving bank pays the bond originator a commission.

Bond originators are professionals who depend on your bond application being successful in order to earn an income and for this reason they will prepare your application and present it to the banks in a manner that best represents you as a low risk customer.

A bond originator represents numerous prospective bond applicants which gives them leverage, which they will use on behalf of all of their customers to secure a bond approval and walk you through the entire process from document collection to final approval and registration of your bond. The bond originator only gets paid his commission from the bank once the bond is registered over the property and is your single point of reference during the process. They will contact the attorneys and banks during the registration process to ensure that the registration is completed in the shortest possible time frame.