Advance financial preparation is becoming increasingly necessary for prospective homebuyers – and not only because many South Africans have experienced some kind of credit problem in recent years, but because lenders continue to apply extremely strict credit criteria and automated “scoring” or evaluation systems when considering home loan applications.
And to help facilitate this preparation, SA’s leading mortgage originator BetterBond has just joined forces with a leading credit bureau.
“Obtaining pre-qualification for a home loan is rapidly becoming as much part of the home buying process as saving for a deposit, and is likely to become even more essential,” says BetterBond CEO Shaun Rademeyer, “as the recently gazetted ‘credit amnesty’ starts to take effect and credit providers become even more cautious about lending money.”
In addition, he says, pre-qualification does make things easier for everyone involved in the home purchase, he says. “Once homebuyers have a clear idea of what they can afford and will be allowed to borrow, for example, they don’t spend time looking at homes that are out of their price bracket – and are often in a better position to negotiate with sellers than buyers whose finances are uncertain.
“At the same time, estate agents who deal with pre-qualified buyers are more easily able to match them to suitable properties and have a better chance of concluding a sale, while home sellers who accept offers from pre-qualified buyers are much less likely to suffer the disappointment of those offers falling through because the buyers can’t obtain the requisite home loans.”
However, Rademeyer notes, most consumers need knowledgeable help to navigate the pre-qualification process, which includes guidance as regards their gross and disposable income, the maximum monthly bond repayment, any deposit requirement and the additional costs associated with a property purchase, so that they can make an informed decision about what they can afford.
“And thanks to our new partnership,” says Rademeyer, “our mortgage consultants and estate agency partners will now be able to access a comprehensive credit record that will be of invaluable help to them in providing our pre-qualification service. The credit check will provide detailed information about the client’s financial history and credit status as well as any ‘negatives’ that could jeopardise their chances of being approved for a home loan.
“This will give prospective buyers the opportunity to repair damaged credit records and improve their credit scores before they apply for home loan pre-qualification or approval, and will thus significantly improve their chances of success – and of achieving home ownership.”