(Improve your credit score before you apply for a home loan. Click here to learn how…)

Banks' relaxed lending policies are supporting a revival in the property market and now is the time to apply for a bond, advises South Africa’s biggest mortgage originator, ooba.

"With the relaxation of lending policies there should be a much improved chance of being approved for a loan on favourable terms," says Kay Geldenhuys, property finance manager at ooba. "Banks are once again offering 100 percent loans and the current lower interest rates make it a better time for consumers looking to buy."

Here are some tips from ooba on getting that bond approval:

1. Check affordability

   Before you even apply for a loan, check whether the property is affordable, suggests Geldenhuys.

   "Determining the right price range is an essential first step to avoid wasting time looking at unsuitable properties. A property finance consultant will take you through the exercise of establishing what you can afford, taking into account your specific financial requirements. Monthly repayment affordability is generally calculated at 25 to 30 percent of joint gross income, but other criteria, including existing debt commitments, may affect the size of the loan that the bank will grant.

   "Remember that the 'hidden costs' (transfer and bond registration fees) usually have to be paid upfront, adding a sizeable amount to the cost."

2. Get prequalified

   One way to ensure that the loan you apply for will be granted is to get a prequalification. Companies such as ooba will, at no cost, prequalify you for a certain bond amount which takes the stress out of applying for a bond once you have decided on buying a property.

   An additional positive factor is that buyers who are prequalified are in a much stronger position to negotiate with sellers.

3. Check your credit record

   (Click here to learn how you can improve your credit record.)

   Bond applications may be declined for several reasons: you may not be able to afford the monthly loan repayments, or may require a 100 percent loan that would push the repayments beyond your reach.

   Another critical consideration is your credit profile, says Geldenhuys. "This includes your employment history and consumer bureaux results, which provide a picture of your debt and payment history. If the bank considers you a good credit risk, it will assess the value of the property to be purchased. If this too meets all the relevant criteria, the loan is usually granted. The mortgage originator also often motivates the merits of a particular loan application to the bank’s credit manager."

   Read 'Improve your credit score' to learn how you can improve your odds of being granted a home loan.

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