Can you qual­ify for a home loan on a sin­gle in­come?

George Herald - Private Property - - Property News -

Be­ing in the mar­ket is never easy. With so many op­tions that seem out of your reach, it can be easy to give in to de­spair and al­low your­self to think you'll never find your per­fect match. But, if you stay fo­cused, you won't be on the mar­ket for long - well, at least not when it comes to prop­erty.

"Many be­lieve that own­ing prop­erty on a sin­gle in­come just is not pos­si­ble. But, the more that 40 000 sin­gle fe­males and more than 35 000 sin­gle males who have al­ready pur­chased prop­erty across South Africa this year will beg to dif­fer," says Adrian Goslett, re­gional di­rec­tor and CEO of RE/MAX of South­ern Africa.

While it might be trick­ier to qual­ify for the nec­es­sary fi­nanc­ing on just one salary, there are many who have man­aged to think up a so­lu­tion to make it hap­pen.

Below are some of Goslett's sug­ges­tions for how to work around the chal­lenges of own­ing prop­erty on a sin­gle in­come:

Two are still bet­ter than one

"Ad­mit­tedly, it can be tricky to qual­ify for a home loan on a sin­gle salary, es­pe­cially if you're look­ing at houses over the R1-mil­lion price point. If you're strug­gling to ac­quire the nec­es­sary fi­nanc­ing, ask a rel­a­tive or close friend to sign as surety for you. This al­lows you to take out a loan based on their credit score. How­ever, you need to ex­plain that the banks will come knock­ing on their door should you ever fall short on pay­ment, so be sure to ap­ply only for amounts you can af­ford."

Don't get stuck in red tape

"Many first-time buy­ers are un­aware that sim­ply hav­ing the avail­able funds does not grant in­stant ac­cess to a home loan. To qual­ify at most fi­nan­cial in­sti­tu­tions, the main ap­pli­cant will need to have a life in­sur­ance pol­icy, with some in­sti­tu­tions even go­ing so far as to spec­ify ad­di­tional dis­abil­ity cover. Ad­mit­tedly, this ad­di­tional monthly ex­pense is a frus­trat­ing drain on a sin­gle in­come house­hold, es­pe­cially if you don't have any de­pen­dants to pro­vide for af­ter your un­timely death. But, banks need these poli­cies as surety that the out­stand­ing amount will be paid no mat­ter what may hap­pen dur­ing the lend­ing term. Sin­gle in­come buy­ers will need to bite the bul­let on this one and fac­tor in this ad­di­tional monthly ex­pense when bud­get­ing for their home loan."

Less is also more

"One should al­ways re­mem­ber to count one's bless­ing and not one's losses. The truth is that, un­less you have chil­dren, while you may only have one in­come to cover all your ex­penses, you also only have one mouth to feed, one body to clothe and one per­son to en­ter­tain. Your in­come may to­tal a lower amount, but so will your ex­penses. And, with­out a part­ner to con­sider, the only per­son you may hold re­spon­si­ble for a lack of sav­ings is your­self.

Make the most of your sit­u­a­tion by sav­ing up for a size­able de­posit which can help you qual­ify for your home loan. It is true that own­ing prop­erty on a sin­gle in­come comes with its dif­fi­cul­ties. But, the same can just as eas­ily be said for own­ing prop­erty on a dual in­come, with ques­tions like 'How do we weight the pay­ments?' and 'How do we split the prop­erty if the mar­riage fails?' in­stantly spring­ing to mind. The truth is that pur­chas­ing real es­tate al­ways comes with a few chal­lenges that home­own­ers, whether sin­gle or mar­ried, will have to work around. How­ever, the long-term ben­e­fits of fi­nan­cial se­cu­rity are well worth the trou­bles you might face at the start of any home-buy­ing process," Goslett con­cludes.

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