How to downsize where you live effectively

The majority of these repeat buyers will need a new home loan in order to put their plans into action – and most will find the application process has changed since they last went through it, especially if that was more than 10 years ago.

For example, they should be prepared for their overall debt situation, income and monthly expenditure to come under much closer scrutiny, thanks to the National Credit Act.

Although banks are eager to lend to home buyers, this legislation requires them to ensure that any new credit application they approve will not result in the consumer becoming over-indebted, and they take this very seriously.

In addition, repeat buyers should engage the services of an expert originator if they want to streamline the process, significantly increase their chances of approval and ensure they get the best available interest rate – all at no additional cost to themselves.

With BetterBond, buyers only need to complete one application that is motivated and submitted to several banks simultaneously, including the buyer’s own bank.

This encourages the lenders to reply quickly – often within hours – and also ensures they immediately make their best offers as regards the interest rate to be charged.

There is thus no longer any need for the buyer to go from bank to bank with their home loan paperwork and then endure a long wait for replies or the stress of trying to negotiate rates themselves.

Currently, the average difference between the highest and lowest interest rates offered on a single loan application is 0.5% – and more prospective buyers need to be aware of what a difference this can make over the lifetime of their home loan.

On a R1.5 million loan, for example, a rate concession of 0.5% translates into total savings of about R6,000 a year on your instalments, and more than R118,000 on the cumulative cost of the property over 20 years.

What is more, the National Credit Regulator says the average rate of credit application approvals in South Africa is currently only around 40%.

To ensure that the application process runs as smoothly and quickly as possible, repeat buyers should be prepared to provide their originator with the following:

• Personal details, such as their full names, ID number, tax number, date of birth, phone numbers, marital status, number of dependants, level of education, current address and length of stay there, supported with hard copies.
• Employment details for the past two to five years.
• Income details such as gross and net household earnings, supported by three months’ worth of payslips and bank statements.
• Monthly expenditure details.
• Finally, prospective borrowers should be prepared to provide details of any other assets they own, such as savings, shares, holiday homes, rental properties and life insurance policies, although these may not always be required.

Carl Coetzee is CEO of BetterBond

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