How to qualify for a home loan in South Africa

How to qualify for a home loan in South Africa

Investing in a home is one of the most significant decisions you’ll make. Here’s how to qualify for a home loan, as well as three steps to prequalification.

Article summary

  • Pre-qualifying for a bond gives you the edge when it comes to buying your dream home.
  • The home loan amount you get pre-qualified for is based on your monthly earnings and expenses, as well as any debts you may have, plus your credit score.
  • A pre-qualification certificate is valid for 90 days, but can be recalculated and revalidated after this period.
  • Your O-YES Home Loans finance expert is here to help you pre-qualify for your bond so that you can enter the home-buying process with complete peace of mind.
  • Once you’ve applied for a home loan and accepted the bank’s quotation, the bond registration process will begin, and your dream of owning your own home on its way to becoming a reality.

Investing in a home is one of the most significant decisions you’ll make, and you’ll want to ensure you have the best chance possible of acquiring your dream home. One of the best ways to achieve that is by getting prequalified, so you can enter the house hunting process with a concrete idea of what you can realistically afford.

What factors will the bank take into account when assessing your home loan application?

Your income and expenses will play one of the biggest roles in determining your chance of home loan approval. The bank will compare your monthly income and expenses, and therefore how much money you have left over every month, to the required monthly repayment for the home loan in order to determine your loan affordability.

They will also look at the size of your deposit. The higher your deposit, the less risk there is for the bank, and the better the chance you have of securing your home loan.

Your credit score will be a major factor. This is a three-digit number that incorporates information such as your debt repayment history, and effectively tells the bank how much of a risk you are. A credit score of 610+ means you have a good chance of having your home loan application approved.

How to get pre-qualified for a home loan

Here’s how prequalification works in three easy steps:

Step 1: You’ll need to provide your O-YES Home Loans consultant with the details of your monthly income and expenditure, including income tax and living expenses. You’ll also need to state any debts you may have.

Step 2: Your O-YES Home Loans finance expert will calculate your pre-qualification amount in accordance with the guidelines of the National Credit Act, and check your credit score. You will then be issued a pre-qualification certificate, which you can give to an estate agent to prove you’re pre-approved and ready to shop for your dream home.

Step 3: Your pre-qualification is valid for 90 days. After this, your O-YES home loans finance expert will contact you to check whether your expenses have changed during this period of time. If there has been a material change, the pre-qualification will be recalculated and revalidated. If there is no change to either income or expenditure, O-YES home loans will reissue a revalidated certificate.

To make the home-buying process that much easier, O-YES also offers a range of home loan calculators to help make the home-buying process easier. Get prequalified for a home loan with O-YES , then, when you’re ready, you can apply for a home loan.