In the “good old days” the banks were falling over themselves to give buyers home loan finance. A buyer could obtain a “pre-approval” from their bank, which guaranteed finance for the purchaser up to a certain value.
In the period since 2009 it was almost the norm for a buyers’ bond to be declined – with well over 50% of transactions falling through due to finance issues. This has a severe effect on property sellers’ as they are unable move on with their lives until a final bond grant is issued.
In addition to this, their property would effectively be taken off the market for the period from acceptance of the offer to the declining of the bond application – which in some instances could be 4 to 6 weeks. In that period other potential buyers are lost – with harsh financial implications in a tough market.
Latest statistics from ooba show that banks approval rates in the Western Cape are just over 50%. The approval rates through ooba are higher, at nearly 70% – but this still means that between 50% and 30% of all sales fall through due to finance problems.
The good news is that ooba has just launched a pre-qualification service that buyers can use. This means that, even before you start your search for a property, you can have yourself pre-qualified by ooba for a mortgage bond. Whilst this is still no guarantee that the banks will grant the bond, it is a really strong indication that, as a client, your scoring should satisfy most of the banks.
It’s important as a purchaser that you make sure, not only of the amount of finance you should qualify for, but also the loan-to-value – or the percentage of the selling price, that the banks will finance.
The benefit to you as a buyer is that when you make your offer on a property and you have been pre-qualified it significantly strengthens your offer. If you are competing against another buyer for a property and you are pre-qualified while they are not, a seller will almost certainly view your offer as more likely to succeed.
The additional benefit to you as the buyer is that you are more likely to obtain your finance and spare yourself the disappointment of having your bond application declined and your purchase falling through.
If you are a serious purchaser I would strongly recommend that you speak to an ooba home loan consultant and have yourself pre-qualified. You will, in any event, have to provide all this information when you make your home loan application – so why not do it now and significantly increase your chances of success?
Principal of Harcourts Platinum, and Director of Harcourts South Africa
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