With more affordable property prices and bank approval rates at historical high levels, coupled with easing deposit requirements and lower interest rates, this may be the best ever opportunity for first-time buyers to buy a home. But to get a home loan, you’ll need a good credit rating, check affordability and get prequalified.
Here is a home buyer’s guide that provides advice to help make the home buying experience as easy and problem free as possible:
A good credit score will significantly improve the likelihood of home loan approval – and that’s something you can start working on right now.
Besides the ‘want’ there’s the ‘need’ for financial security and property is an excellent investment. The ‘forced saving’ of putting part of your salary into a home loan on the property you live in makes far better financial sense than paying rent to cover someone else’s bond.
1. Apply the 50/30/20 rule
US Senator Elizabeth Warren, a bankruptcy expert, and her daughter, Amelia Warren Tyagi, popularised this rule: split your income into three spending categories: 50% goes to essential bills and monthly expenses, 20% toward financial goals and 30% to personal spending (all the stuff you like to spend money on but don’t really need). Put the money earmarked for your financial goals into a separate savings account.
2. Ditch the debt
Debt is one of the first things banks look at when it comes to assessing bond affordability. It doesn’t matter how many applicants there are - any bad debt will count against you. To qualify for the largest bond at the best interest rate. Get rid of any unnecessary store cards, credit cards and loan accounts. If you can tighten your belts to pay off things like car loans, even better.
Ideally, you need as few expenses coming off your bank accounts each month as possible,” says Venter. “This shows the bank that you have sufficient disposable income and that each of you are serious about your financial health.
3. Build a strong financial history
Clearing bad debt is important, but she says a record of good debt is an equally powerful tool for looking good on your joint bond application.
Banks like to be able to see that you have a history of paying what you owe timeously and responsibly,” explains Venter. “A good financial track record really does count in your favour.