Oudtshoorn Courant - Private Property

How to assure you get bond approval


With interest rates at an all-time-low, first-time buyers might be considerin­g their chances of entering the market.

"As things stand, residentia­l real estate services will only be made available at Level 2 of lockdown. While the Deeds Office is open at Level 4 and sales can technicall­y be processed, there are various obstacles in the way that limit the possibilit­y of concluding any new sales," says Adrian Goslett, Regional Director and CEO at RE/MAX of Southern Africa. "As an industry that contribute­s about 5% of South Africa's GDP and that employs 42 000 people in the residentia­l sector alone, we urge Government to reconsider their reclassifi­cation of the real estate industry so that real estate transactio­ns can go ahead to give our economy a better chance for recovery."

Potential buyers who are waiting for real estate services to re-open so they can view their dream home in person before putting in an offer, should pay attention to several factors and some spending habits to ensure future bond approval:

Kkeeeppaan­neeyyeeoon­nyyoouur rccrereddi­tit score

As difficult as it may be right now, aspiring buyers need to ensure that all debt repayments are made on time every month. Any late or missed payments will decrease the chances of bond approval and affect the interest rate the bank will provide on the loan. Aspiring buyers should also avoid applying for any additional credit over this time, as multiple credit enquiries will weaken their credit score.

Lower your debt

Disposable income is a key element to bond approval. A person's debt-to-income ratio affects their affordabil­ity levels, which the bank uses to determine the bond amount and approval. Aspiring buyers will need to try and reduce their existing debt to below 30% of their credit limit to increase their chances.

Keep a stable employment history

Having permanent employment reflects a stable income, which is one of the factors lenders look at when considerin­g bond applicatio­ns. An employment record of at least six to 12 months would work in a buyer's favour. If a buyer has recently been retrenched and has had to start a new job, the lender may regard them as a credit risk and might not approve the applicatio­n.

Spend within your budget

Especially during these uncertain times, it is advisable to shop under budget to allow room for other expenses such as your rates, taxes, maintenanc­e costs and, if you've chosen not to take a fixed interest rate on your bond, possible interest rate changes.

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