The growing importance of pre-approval

Pre-ApprovedAlmost half the SA consumers currently classified as “credit active” are having trouble paying their bills – a statistic that is very worrying (or should be) for both property sellers and their agents as well as those who own rental properties.

According to figures just released by the National Credit Regulator (NCR), there were 20,08-million credit-active consumers registered with SA credit bureaux in the first quarter or this year, compared to 19,97-million in the previous quarter.

Of these consumers, only 10,55-million (52,5%) were rated as being “in good standing” while 9,53-million (47,5%) had “impaired” credit records.

Altogether, they were responsible for almost 71,73-million accounts (or at least three accounts each), some 18,31-million of which were impaired in some way.

Credit impairments can of course include an occasional late or partial payment of an account, as well as more serious defaults and judgements for debt.

However, the latest statistics undoubtedly indicate that more and more consumers are having some sort of trouble balancing their budgets – as indicated also by the latest statistics from the TPN Credit Bureau which show that between 25% and 50% of tenants (depending on the monthly rental bracket) did not pay their rent in full and on time in the first quarter.

It is also worth noting that the automated home loan application assessment processes now used by most banks generally don’t distinguish between major and minor credit impairments. A bad record is a bad record as far as they are concerned, and will usually lead to the bond application being rejected.

This underlines, once again, how important it is for prospective property buyers to obtain proper pre-approval for finance, preferably through a reputable mortgage originator such as BetterBond, which can and does assist potential buyers to repair their credit histories when necessary and is prepared to motivate individual applications.

Pre-approval, as opposed to prequalification, is the process in which the financial circumstances and credit records of a prospective buyer are thoroughly examined and assessed so that a lender can confidently issue a letter confirming that he or she has been approved to buy a home for a certain amount.

The benefits are that the would-be buyer knows what he can afford, that the agent knows what type of property to show him or her, and that the home seller can rest assured that the buyer is in fact in a position to raise the necessary finance. In short, peace of mind all round.


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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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