Step one in the property purchase process: get preapproved for your home loan
Category News
Whether you've already found your dream home and you're ready to put in an offer or if you're just starting to browse the listings, you'll be doing yourself a massive favour by getting preapproved for the home loan that you'll need to make your dream a reality. Jawitz Properties takes a closer look at how home loan preapproval works and why you should do it.
What is home loan preapproval?
When you buy a home, you are likely to need a loan from the bank. If so, the bank will only lend you a certain amount, which is determined predominantly by your financial situation. A home loan preapproval is a process that looks at your finances and tells you how much the bank will potentially lend you. You can then add this to the amount that you have saved up for a deposit and you'll know exactly what you will be able to afford.
What are the two types of home loan preapproval?
The well-respected South African bond originator ooba offers you two options for home loan preapproval: the ooba bond indicator and the opportunity to speak to an expert. Using the ooba bond indicator, you can check your credit score and find out what you can realistically afford, as a ballpark figure. You can do this online in just a few minutes. If you choose the speak to an expert option, then you'll just fill in your personal information, contact details and South African ID number, and one of ooba's team members will connect with you and get all the information they need to give you as precise a figure as possible. The great news is that both options are completely free of charge.
Reasons to get preapproved
Firstly, being preapproved for your home loan means you have a clear idea of what you can spend - there are no "ifs", "buts" or "maybes". If you've gone the "speak to an expert" route to get preapproved, then the ooba team will have assessed your financial information and circumstances exactly the same as a bank would have. As a result, they can give you a clear and accurate idea of how much you will be granted as a home loan.
Secondly, being preapproved for a home loan gives you a competitive advantage in the eyes of a property seller. Put yourself in the seller's shoes and imagine that you receive two offers to purchase for your property. The first offer (yours) comes with home loan preapproval, which gives them certainty that your home loan will be approved and the deal will therefore go through. The second offer (which may be even slightly higher in monetary terms) comes from a would-be buyer who has not done the preapproval process. The seller therefore has no idea what their financial situation is or what their means are. In many cases, the seller will accept your offer - even if it is for a slightly lower amount - because it comes with peace of mind.
Thirdly - and perhaps most importantly - being preapproved for your home loan safeguards you against disappointment. If you know you can afford an absolute maximum of R2 000 000, you're not going to look at properties priced vastly higher than that.
Buying a property is an exciting time and our Jawitz Properties #RealPartners are here to help and ensure that it doesn't lead to disappointment. Being preapproved for your home loan is an important step in this process. Contact us for more information about home loans, preapproval or any other facet of buying property in South Africa.
Author: Jawitz Properties
