Buying a home in South Africa can be very rewarding. The environment is very beautiful and the sub tropical climate is ideal for many outdoor activities. If you are the type of person who has a passion for the outdoors then investing in a good real property in South Africa would be a dream come true. To get started on that dream, the first step for most people who do not have millions of Rands in their bank account is to get a home loan.
Common Bank Requirements for a Home Loan in SA
There are three major things most banks will consider to grant you a home loan. This is not only specific to South African banks but majority of banks would look into these things.
First would be the stability of your monthly expenditure. Most banks need to be ensured that the person getting a loan from them have adequate source of income to be able to pay their monthly financial commitment. Expect a major credit investigation and prepare to bring out all proof of income, assets and even liabilities. It is important not to lie, fake and manipulate any of these financial records to avoid being banned and getting into legal matters with the bank.
The next would be to have a clear credit record. This means you have no other outstanding unpaid loans or you are not deeply buried in debt. It is not necessary for you to be completely clear of debt. A little credit card balance or car loan would actually even help. If other banks issued you with a credit card or car loan, it only means that you have already been pre-evaluated and very much capable of being granted a loan. What the bank needs to see is that you are religiously paying your credit card bills and your monthly car loan to ensure them that you are committed and trustworthy enough not to run away from your financial obligations.
Another major bank consideration would be a certain amount of deposit. Most banks will require around 5-20% deposit of the total loan amount. Some people who have sufficient amount of savings can easily afford this amount. For those who do not, this would be a perfect time to gauge whether the loan is actually feasible with one’s income. Try to save up the actual amount one would be spending monthly to pay for the loan in order to accumulate the needed deposit.
Hidden Costs of Purchasing a Home
The cost of purchasing a home is not always clear cut. There will always be an unexpected cost such as taxes and legal fees. Be sure to have an allowance for such budget adjustments. Take time to compare rates from different banks. Know the financial requirements and always read the fine print in loan forms.
Purchasing a home is a continuous commitment that can last for several years. One may need to give up a few shopping escapes and travels momentarily to concentrate on the budget for the house. These are small sacrifices to make because owning a home will be one of the most fulfilling things one can achieve in their lifetime.