Securing finance on a first home

Simply having a home to call your own is a dream to which many people aspire. That is why securing finance for it is a process that takes careful consideration.

Firstly, when applying for a bond through a bank or mortgage originator you will need to present the following documents: Proof of income, a copy of your South African ID/passport, three months’ payslip or stamped bank statements and proof of current residential address. Those applying need to be 21 years of age and void of judgements or defaults to their credit profile.

Once you have all the necessary documentation and are at the qualifying age, your credit profile will determine whether or not you can secure a home loan. You will be required to give permission to have this accessed as part of your home loan application. It is important to note that you can get a record of these details first so you can review what your profile looks like beforehand.

Each person is entitled to a free credit profile copy a year from each of the three major credit bureaus. If it looks unworthy of a home loan, make sure you rectify it before applying. Banks also analyse your credit record to decide what interest rate to offer you. If your credit score is favourable, you would be considered a good risk, your chances of securing a bond will increase and banks will offer you a better deal to ensure that they get your business.

Before your bank can inform you on the home loan amount you qualify for, it is helpful to determine how much you can afford to spend each month. This will require you to calculate a debt-to-income ratio and factor in a down payment to decide what you can realistically afford, both upfront and monthly. You can do this by using a bond calculator. Although this is not a requirement from your financial lender, it is a great technique to decipher if you would be able to cover your expenses and live comfortably while paying towards your bond.

Moving into your first home is a great accomplishment and sound investment. Make sure that the process is successful by presenting the relevant documents, ensuring that your credit score is desirable and agreeing on a home loan amount that is suited to you budget.

Once you follow these steps in securing finance for your first home and are thinking of buying a home in Cape Town, Coastal Property Group has only the finest residential properties, many of which over-look the suburb's pristine oceans.