7 Common Bond Application Mistakes to Avoid

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Buying a home is one of the most rewarding- and stressful- things any of us will ever do. As this is likely to be one on the longest term- and most valuable- assets you will ever own. Therefore, make sure that you take the time to avoid these common mistakes when it comes to applying for a bond for the first time:

1.     Not reading the loan documents

While it is true that a bond originator like BetterBond will help you through every step of your home loan, it is still your signature on the bond application documents at the end of the day, and so it is your responsibility to ensure that you understand and comply with all of the clauses in your contract. If you do not understand something, ask your bond originator, estate agent or lending institution to help you before you sign. Ask as many questions as you have to.

2.     Not locking your rate

As you might have already read in one of our previous posts, What a Difference a Rate Makes, having a fixed home loan rate makes all the difference in the long run. Mortgage rates change on a regular basis, so if you get a mortgage quote that works for you, make sure that you tell your bank, lender or broker to lock it before you lose it.

3.     Not comparing loans

Not taking the time to compare loans from various financial service providers is a mistake many first time buyers make. Do not go with the first bank that pre-approves you for a home loan, shop around until you find a loan that you can live with happily for the next 15-20 years.

Consider using a mortgage broker or a bond originator who can help you compare the loans and repayment amounts from a number of banks concurrently, and find you the lowest rate with the best terms.

4.     Not getting pre-approved

Imagine the disappointment of finding the home of your dreams- and then finding out that you do not qualify for the financing to purchase it. Avoid disappointment and prepare in advance by getting pre-approved for your home loan.

Mortgage pre-approval means that the bank references your credit and looks at your income, assets, employment and your debt-to-income ratio to determine how much you can afford. Once you are pre-approved, you will know exactly how much you can afford to spend on your new home, and you will also have physical proof from your lender to show the seller that you are serious about the property.

5.     Not looking at the total costs 

When you buy a house, you are committing to pay for more than just the listed price of the property. Your bond payment includes interest, taxes and insurance.

Prospective homebuyers often mistakenly do not factor their property taxes and insurance premium into their overall mortgage budget. In addition, you should also prepare for transfer duties, conveyance fees and bond initiation costs that will add to the overall amount you will have to pay during the purchase of your property.

6.     Not watching your appetite for credit

If you are trying to apply for a new credit card, or vehicle financing at the same time as applying for a home loan, you could be biting off more than you can chew in terms of debt. Having more debt will also make you a greater credit risk, which will affect your pre-approval eligibility, and could also affect your interest rate should you be approved.

7.     Not checking your credit to begin with

Before you even attend a single open house, you should have a very good understanding of what your credit rating is and what your ceiling is for your monthly bond repayments. If you are not sure about your credit standing, make sure you check it out long before applying for a loan. Try to give yourself enough time to pay off your debts and improve your credit score if you have to, as this will improve your chances of getting pre-approved.

For advice or assistance in applying for your home loan, contact BetterBond.

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About BetterLife Home Loans

Since 2003 BetterLife Home Loans has been SA’s No.1 Bond Originator, handling the entire home loan application process on your behalf – free of charge! Our aim is still to source the best interest rate for you by submitting your home loan application to all the major banks. There is no easier way to apply for a Bond or Home Loan in South Africa!

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