Housing Expert Gives SA Home Loan Tips

October 22 - Applying for a South African home loan banks and lending institutions is not an easy process, despite the fact that economic conditions have improved.

The CEO of RE/MAX in South Africa, Adrian Goslett, said that there are a number of issues to take into consideration to ensure that applicants stand a better chance of having their requests approved.

Firstly, it should be remembered that 100% home loans are more likely to be turned down since they are a greater risk to the bank. As such, more success may be had if consumers are able to put down a deposit.

Secondly, affordability is a big issue. The law states that a home loan may not be granted if the monthly repayments are larger than one third of the applicant's monthly net income.

Stable income is another issue that determines the success of a home loan application. If a person is unable to show proof of income on a steady basis, getting the loan approved will be difficult.

Likewise, a poor credit rating will severely affect a person's chances.

Finally, being self-employed may be detrimental, despite the fact that more and more South Africans have been forced to go down the independent path since the recession hit.

"Even with the worst of the recession behind us, combined with the fact that the banks are starting to marginally relax their lending criteria, getting a bond application approved remains a challenge for many," said Goslett.

"Stricter lending criteria due to the NCA has been, to a large extent, blamed for the decline of the property market in recent years," he added. "However, the truth is that the decline is not solely due to the NCA, but rather as a result of an amalgamation of various factors, including the world wide recession, the fluctuating interest rates, inflation and so on."

10/22/2010 9:48:18 AM