HOME LOAN TIPS

Money does not come cheaply these days - why would you compromise your cash flow if you have the tools available to maintain and secure the best finance solution available.

Buying a home can be a fun and exciting experience. If your finances are not in order, you might jeopardize the chances of closing the deal on that perfect home after weeks of viewing and searching for the perfect fit.

Finding the right home however is just one step in the process.

Choosing the right home loan can be just as important. Here are some tips to help you find the right home loan as easy as possible.

Tip #1 - Start saving towards a deposit

Currently most of our financial institutions are quite lenient towards their finance options and require little or no deposit to present you with a home loan.

If you're in a position to place a deposit though, this form of security could prove to save you thousands as the banks would consider an improved interest rate given the fact that you are sharing in the risk of finance by committing some of your own capital.

Get into the habit of living on less than you earn by contributing a large portion of your earnings towards a savings portfolio.

 Tip #2 - Check your credit score

Having a good credit score puts you in a position to attract the best deal on your home loan. So it's a good idea to obtain a copy of your credit report before starting the home buying process. You will see what your credit profile looks like to potential lenders and can then take steps to improve your credit score if necessary.

You can receive one free copy of your credit report each year from the main credit bureaus such as  - Experian.

A suitable alternative is to approach a mortgage specialist to obtain a Lucid Credit Report on your behalf and confirming that there are no discrepancies on your profile.

Tip #3 - Maintain your credit profile

It is important that your credit profile is well maintained thus, some assistance from your side could mean the world of difference. The pointers could change the outcome of your application;

• No debt is not necessarily a good thing if you want to apply for a home loan. Reason being that if there is no track record of how you service short term debt, the banks can not calculate their risk in how you would service long term debt.
• Clear your credit cards and close them entirely. Even if paid in full, the banks may consider the credit level on your credit card as "fully committed" regardless whether you have or not.
• Pay on time
• Address potential negative notes on your credit score from the report you obtained.
• Budget carefully and work diligently with your earnings.

Tip #4 - Get your supporting financial documentation in order

When you intend applying for a home loan, you'll need to prove to your lender that you can afford to pay for the home you decided upon.

Specific supporting documentation will be required depending on your profile type being a salary earner, a commission broker or a self-employed individual.

Submitting a complete application with all required paperwork increases the likelihood of a positive outcome.

Speaking to a competent home loan specialist will ascertain that you obtain the required supporting documentation prior to even making an offer to purchase.

Tip #5 - Utilize a mortgage calculator

Mortgage calculators are great tools for creating a preliminary expectation of how much you can afford. These calculators often create an expectation of what your monthly obligation will be after registration and also gives a guideline of those often forgotten additional costs payable upfront towards transfer duty, bond and transfer attorney costs.

Be sure to also consider the financial implication of additional payments towards your mortgage loan.

The savings in interest as well as time period is substantial.

Tip #6 - Get pre-qualified

Real Estate Professionals insisting that you become pre-qualified do so for your own benefit to ensure that;

•  You know what you can afford
•  You realize the monthly financial impact of your financial decision and;
• To help you avoid often emotional decisions towards the acquisition of a home that does not quite suit your financial profile.

In obtaining an accurate pre-assessment from one of our qualified mortgage specialists, the process of acquiring a suitable home would be less stressful given the fact that the financial parameters have been addressed prior to commitment.

The mortgage pre-qualification process is fairly simple, usually just requiring some financial information such as your income and the amount of savings and investments you have.

By doing so you'll also avoid nasty credit bureau surprises during the application process.

Tip #7 - Your own bank will not necessarily offer you the best financial package

We often assume that we've banked loyally with a specific financial institution and based on this relationship, your own bank would offer the best loan option when you apply.

Consider the fact that banks also compete for bigger market share and they do so by luring other banks' client with amongst other things, improved finance deals and lower interest rates.

Your own bank might not consider existing business in their portfolio with the same diligence as they would consider the business of a new prospect.

A mortgage originator such as Greendoor Homeloans Garden Route can submit at no expense to you a single application form to all competing financial institutions thus ensuring that your application has a competitive edge to it with all competitors having an opportunity to offer their stake in your portfolio.

Multiple submissions therefore ensure that you obtain the best possible financial offer when Greendoor Home Loans Garden Route applies on your behalf. 1 % lower in interest rate on a loan amount of R1,000,000 over a standard period of 20 years amounts to a saving of almost R 200,000 over the period of your home loan.

Considering that you don't buy a house every day of the week, invest the time to speak to your mortgage consultant - they acquire the best possible deals on offer literally every day of the week.

Setting the time aside to have your portfolio properly assessed and your application properly drafted will have a massive saving effect on your short and long term cash flow.

Tip # 8 - Don't mess up your credit during the loan processing

It's not uncommon for banks to pull your credit report a second time to see if anything has changed before your loan registers.

 Be careful not to do anything that would bring down your credit score while your loan is being processed. So, pay all of your bills on time, don't apply for any new credit cards, and don't take out any new car loans until your home loan has registered.