What are the benefits of getting pre-qualified?
Category General News
Not all prequalifications are the same. Here's why and what you need to know about getting pre-qualified.
The uptick in first-home buyers is certainly one of the greatest success stories of last year's property market rebound. With the interest rate a historically low 7% percent, and unchanged after the latest South African Reserve Bank Monetary Policy meeting, those looking to break into the property market could not ask for better market conditions.
READ: SARB holds rate steady, as 'KZN leads property market recovery'
Considering that first-home buyer applications increased to more than 70% between June and December last year, they are also able to afford far more home than this time last year.
According to BetterBond's applications, the average purchase price for a first-home buyer increased by almost 10% in February, year-on-year. A buyer with a monthly salary of R25 000 is now able to afford a home of just over R967 000, with a monthly installment of R7 500.
The same buyer would have been able to purchase a property of just over R778 000 last year when the interest rate was at 10%. As there is no transfer duty payable on a bond of less than R1 million, a first-home buyer would only have to pay a deposit and the legal costs, a considerable saving that makes homeownership more attainable.
But buying a home can be complicated. And this is where Prequalification simplifies things. The process gives you guidance when shopping for your future home. While a prequalified mortgage does not guarantee a loan, there are several benefits for you, the borrower.
However, not all Prequalification's are the same.
A quick prequalification is when you provide your income estimated expenses and then you are provided with an estimated price you can purchase for.
READ: How much house can you buy with the average salary?
An in-depth prequalification is when an originator evaluates how much house you can afford based on a simulated application process. Lenders see if you meet the minimal requirements for a loan, and how big the loan should be.
Prequalification is ideal for people who are considering homeownership but who are not necessarily committed, whilst doing an in-depth prequalification will provide you with a more accurate number.
Click here to check your bond affordability or Click here to start a free pre-approval.
It involves some of the same steps as prequalification, though borrowers have to submit financial documents. One stipulation is that borrowers have to get a hard credit check. Originators review the information for a more precise idea of the amount home borrowers can afford.
Contacting a bond originator to assist you with a true prequalification process is about giving an identity to what otherwise is just another application. According to home loan provide Multinet going this route means "you do not get lost in a system, there is a champion representing you, and fighting for the best deal. Given that this is a free service, the use of this service is often a best-kept secret".
Author: Property24