23 Aug Finding the best Home Loan
When looking for a home loan lender, you have to consider more than just who will be giving you the best interest rate. You also want to use a professional lender with a good reputation that will offer expert guidance and favourable terms.
Here are some simple guidelines for finding the loan that you want:
1. Work on your credit
Banks and private lending companies will always do a credit check on applicants to determine if lending to them will be a financial risk. Your credit score is based on your past credit behaviour and shows lenders how you manage your credit.
Applicants with high credit scores usually qualify for lower interest rates and vice versa. This point should not be taken lightly, as a slightly higher interest rate could mean much higher monthly repayments, adding up to thousands of rands per year.
If you don’t meet the minimum credit score requirements, you need to focus on improving your score before applying for a loan. This can be done by using quality credit cards wisely, only using a small percentage of your available credit, paying bills and other loan repayments on time, and avoiding unnecessary debt.
2. Save up for a deposit
Few people are lucky enough to qualify for a 100% loan. By having at least a 10% deposit, you can drastically improve your chances of getting a loan. The bigger the percentage of the deposit, the more likely you are to have your loan approved.
3. Shop around
A recent survey by the U.S. Consumer Financial Protection Bureau shows that almost 50% of people settle for the first home loan offer they can get. Experts advise buyers to shop around. Being able to save a little bit of money every month will add up to major savings over the period of your bond.
4. Talk to the professionals
By talking to a professional before applying for a loan, you will be able to determine if you will qualify for a loan, what size loan you can afford, and over what period will you be able to repay it. You’ll feel more in control of your finances by talking to a bond originator over the phone, than spending hours filling in online applications.