Buyers Advised on Home Loan Procedures

April 30 - The property market is definitely looking up and activity can be felt across the board. However, many South Africans are still finding that their south africa home loan applications are being turned down by banks.

The Chief Executive Officer of Betterbond mortgage originator, Rudi Botha, said that there are many factors that banks examine before they give potential home owners the green light, over and above looking at the buyer's earnings and expenditure.

"The bank's criteria in the evaluation of an application remains around the affordability and the risk of the applicant when it comes to the repayment of long term loan," noted Botha.

"The ruling that a maximum of 30 percent of the gross salary may be used for the monthly repayment of the home loan installment has been around even prior to the inception of the National Credit Act and it is still applicable today," he said.

Banks also examine disposal income as rule.

According to Botha, banks will also look at the buyer's credit record and ensure that it meets all standards to obtain a home loan.

It is an important point to note that banks differ in their requirements and their calculations for risk factors may vary.

"Banks don't share further information on their scorecards as this is compiled out of numerous characteristics and calculations which are adjusted from time to time as their requirements and strategies change," pointed out Botha.

Those wanting to purchase a home should tread carefully and only take on what they can afford to pay back on a monthly basis.

Related Insurance Articles:
* Housing Minister Outlines Plans
* Low Demand for Buy to Let Property
* Growth in South African House Market
* First Time Buyers Cheer Rate Cut

4/30/2010 1:09:24 PM