Home loan hur­dles for the ma­ture or self-em­ployed

Finweek English Edition - - MONEY - BY GLENDA WIL­LIAMS

First-time home­buy­ers might be f in­d­ing it eas­ier than it once was to se­cure a home loan, but the same can­not be s a i d f or t he mat u r e or s e l fem­ployed.

It is no easy task get­ting a home loan for those that fall into ei­ther of th­ese two cat­e­gories, and even more dif­fi­cult if the un­for­tu­nate ap­pli­cant hap­pens to fall into both. Prepa­ra­tion of home loan doc­u­men­ta­tion re­quire­ments aside, th­ese ap­pli­cants can look for­ward to a sig­nif icantly higher bur­den of doc­u­men­ta­tion a nd a pro­longed ap­pli­ca­tion process, un­for­tu­nately. For the ma­ture − those in their f ifties or older − the process could be far more dif­fi­cult than they might have imag­ined.

The rea­son? Home loans nor­mally run over a 20-year pe­riod with the term of the loan need­ing to ex­pire at, or not long af­ter, re­tire­ment. That’s to en­able the home­owner to pay an amount that is com­fort­ably within their dis­pos­able in­come, an in­come that is gen­er­ally con­sid­er­ably re­duced af­ter re­tire­ment. Where it is not pos­si­ble to grant a 20-year loan due to the ap­pli­cant’s age, the loan term is short­ened and the re­pay­ment amount be­comes sig­nif­i­cantly larger. To com­bat this, a higher de­posit is more of­ten than not re­quired.

While ap­pli­ca­tion cut-off age varies from bank to bank (some, like Absa and In­vestec, don’t have a spe­cific age limit), at FNB that age is 65 and the bank’s pol­icy re­quires the loan to be set­tled by age 75. “Ma­ture home loan ap­pli­cants are typ­i­cally able to put down much greater de­posits than newer en­trants to the prop­erty mar­ket. This usu­ally puts them in good stead in terms of the like­li­hood of be­ing ap­proved for a home loan. Pro­vided that they have man­aged to main­tain a good credit record, they should also typ­i­cally ben­e­fit in terms of

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