Estate Living Magazine Connection - Issue 43 July 2019 | Page 24

P R O P E R T Y & I N V E S T M E N T WHEN APPLYING FOR A HOME LOAN, KNOWLEDGE IS POWER For most of us, the financial and economic mayhem caused by the 2009 global financial crisis is little more than a distant, mildly painful memory. However, given that the crisis had its roots in the unethical granting of credit by some larger international financial institutions, one of the lingering consequences of the so-called credit crisis is that banks are now a lot more diligent when it comes to checking whether people should be receiving credit or loans, and if so, how much credit they should be getting. With that in mind, it’s worth arming yourself with as much knowledge, information and evidence as possible before you approach your bank for a loan to buy that dream home. Here’s a quick guide to maximising your potential for home loan success, no matter who you are or what type of work you do: 1. Know what options are available While these more stringent risk assessment processes have added to the administration involved in applying for a home loan, they haven’t, as some people seem to believe, made it impossible for certain individuals to qualify for a bond. In fact, the opposite is true. The one main lesson that banks learned from the credit crunch was the importance and value of a good credit book. And, as such, most banks are very happy to grant loans to people who are able to demonstrate that they can afford to make their repayments, and have the solid credit history and reliable income to back up that commitment. When it comes to home loans, there are essentially three main options available. The ordinary or traditional home loan is your typical finance facility that you can use to buy an established or newly built residential property. Secondly, there’s the building loan, which, as the name implies, gives you the funding you need to construct your new home, or make improvements or extensions to your existing home. Nedbank also offers a third option, called the HomeVision home loan. This innovative home finance solution lets qualifying applicants register a loan that is higher than the actual amount needed to buy or build the house. The excess amount isn’t immediately given to the applicant, but it is available when the property value increases in the future and their affordability levels increase. 2. Who can apply for what? There’s a common misperception that self-employed people and contract workers can’t get home loans. This simply isn’t true. The banks assess every home loan application on its individual merits, so whatever type of work you do, the most important thing you need to do is demonstrate to your bank that you have a steady and reliable source of income sufficient to repay your loan.