It constantly amazes me how buyers will start the house-hunting process, and even make an offer on a property, without first finding out what finance they will qualify for.
The banks change their lending criteria on a regular basis – so what you may have qualified for 6 months ago could well not apply today.
When buyers say: “I’ve already spoken to my bank” – that sadly, in most cases, means absolutely nothing! If you’ve spoken to someone at your local branch or even a personal banker, they are not the ones who will process or consider your bond application. Their sales pitch to you is that “it shouldn’t be a problem”. Really?
In our experience, where a buyer has not been pre-qualified for a home loan, they are mostly disappointed in either the amount of finance they qualify for, the interest rate offered, or the percentage of the purchase price the bank will finance – or a combination of all of the above.
I mean, would you go to do your grocery shopping without knowing that you had cash or credit available? How much more so when you purchase a property…?
You should start house-hunting once you have a very clear indication what you can afford. Surely it will make a difference as to what properties you will view? Why set your heart on something that you will never be able to purchase…
By all means, speak to your bank. But their informal indication of the bond you should obtain really means nothing. You need to request to be pre-qualified. Some banks have this facility – so make use of it. They will even give you a certificate confirming the figure – and this will help you when you come to making an offer on a property.
In my experience though, I’d encourage you to work with a bond originator. Why? They will know which bank will consider your application most favourably. They will know where the best deal may be, and they are in a position to submit to multiple banks to try and get you the very best finance deal.
There is absolutely NO cost to you. They get paid by the bank and it costs no more than if you went to the bank yourself. It’s just one set of application forms, one set of supporting documentation, one consultant to speak to – and then they fight for you. They’re on your side. Difficult to say that about the banks, who clearly “bat for themselves” given the record profits they are making.
For example, Ooba bond originators have a service called Ooba Indicator – it’s on their website. You can “pre-qualify” yourself here and receive a very accurate indication of what finance you should obtain. It’s quick, it’s easy, and it costs you nothing.
Once you have been qualified and you make an offer, it will strengthen your ability to beat off competing offers from buyers that haven’t been through this process.
Principal of Harcourts Platinum
Director of Harcourts South Africa