Steps in the home loan application

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In simple terms, a bond is a loan for which your house functions as the collateral. When a lending institution lends you, the potential home buyer, money to purchase a property, the actual house is used as a form of security in the event that the repayments are not made. 

The home buyer is required to pay back the home loan with interest over a period of time, usually running from 20 to 30 years. 

So clearly finance is a necessity and once you’ve saved up enough money towards a deposit you’ve passed the first step into entering into the property market. Tip would be also to check your credit profile. A good credit score improves your chances of your home loan application being approved. 

Now that the Buyer and Seller have come to an agreement and have both signed the Offer to Purchase, it’s time to apply for a bond. 

Whether you haven’t applied for pre-qualification at this stage or not, it’s advisable that you shop around for a deal which suits you best. This would mean shopping around for your dream home and location and make the most of your house viewings. 

When your Offer to Purchase contract is accepted, gather all the relevant documents required to apply for a bond. Choose a mortgage originator or go to the Banks directly to apply for a home loan. 

And present the following important documents. 

  • Proof of income
  • Copy of your South African ID or passport
  • Copy of signed Offer to Purchase
  • Proof of current residential address
  • Official salary slip or stamped bank statement (either option needs to show history for the last 3 months) 

Once your chosen Bank has received all the relevant documents, the approval process begins. The Bank will approve the loan subject to a property valuation, and subject to meeting all the credit and FICA requirements.  

This valuation is done to ensure the Bank that the property being purchased reflects its true value. The Bank can now officially grant the loan. Once accepted and signed off by you, it’s off to the Attorneys for final signature and transfer of the property into your name.

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