According to specialists, the South African property sector is going through a low house-price growth that isn’t keeping up with inflation. This aspect can be considered discouraging for investment, but is actually good news for those families searching for their own house.
If you’re considering buying a home in South Africa, you may need to obtain a mortgage loan to help finance your purchase. It can be a complex process, but with some research and preparation, you can make the process much easier. These are a few steps you need to take to learn how to get a mortgage loan in South Africa.
Step 1: Determine your eligibility
First of all, it’s important to determine if you’re eligible for this kind of credit. Lenders will consider several factors when deciding whether or not to approve your mortgage application, including your income, employment status, credit score, and debt-to-income ratio. Usually these qualifications are used to be more demanding if compared to personal loans requests.
To improve your chances of getting approved for a mortgage loan, you should maintain a good credit score. Lenders in South Africa typically prefer borrowers with a credit score of at least 650. You can check your credit score for free through several credit bureaus in the country.
It is also important to reduce your debt and show stable employment or source of income.
Step 2: Find the right lender
There are many lenders in South Africa that offer mortgage loans. To find the right one for your needs, you should compare interest rates, loan terms, and fees charged by different banks or institutions.
In fact, this step is really important, especially considering this economic context and the constant interest rates’s hike used as a policy to try to contain inflation. So, searching for convenient rates can really make a difference for the future repayments.
Step 3: Get pre-approved
Before you start looking for a home, you should consider getting pre-approved for a mortgage loan. Pre-approval involves submitting an application to a bank and receiving a conditional offer for a mortgage loan based on your financial situation.
This step can help you speed up the buying process and determine your budget giving an idea of how much you can afford to spend on a home. It can also show sellers that you’re a serious buyer.
Step 4: Apply for a mortgage loan
Once you’ve found the right lender and been pre-approved for a mortgage loan, it’s time to apply for the loan itself. You’ll need to provide the lender with various documents, including:
ID book or passport;
Proof of income (payslips, bank statements, etc.) and employment;
A list of your assets and liabilities;
A completed application form.
The lender will review your application and may ask for additional information or documentation. If your application is approved, you’ll receive a loan offer, which you’ll need to sign to accept.
Step 5: Closing the loan
If the loan offer is accepted then you’ll be ready to sign the agreement and pay any closing costs. You’ll also need to provide the lender with proof of home insurance and may need to attend a final inspection of the property.
After the closing process is complete, you’ll receive the funds from the mortgage loan, and you’ll be responsible for making monthly payments to the lender.