One crucial factor is how first-time buyers can take advantage of the 7.5% interest rate, as the prime lending rate sits at 11%.
Buying property is one of the most important financial decisions one will make throughout their life. The process demands careful planning, diligent research and attention to key factors that can make or break the property buying prospects.
FNB said that currently one crucial factor is how first-time buyers can take advantage of the 7.5% interest rate, as the prime lending rate sits at 11%.
“It’s important for home finance applicants to intentionally take the time to fully understand the process and requirements that must be met when a bank assesses their home loan applications.
“This can go a long way in helping each applicant increase their prospects of successfully getting their home loan approved,” said Mfundo Mabaso, Product Head at FNB Home Structured Lending.
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First-time home buyers
He adds that according to their data, between 2020 to 2024, most first-time home buyers were in the 23 to 35 age groups, with the average age being 35 for all paid-out home finance applications.
In terms of where first-time home buyers buy their homes, FNB recorded that 55% of all properties are bought in Gauteng, followed by the Western Cape at 19%.
“Furthermore, the bank’s data shows that the majority of first-time home buyers are Personal Banking customers with 6 out of 10 home finance applications approved.
“Interestingly, 53% of all home loan applications are made by males, and the majority of applications are from black families.”
Key things to consider: Clean credit score
Keep your credit score clean by ensuring that you pay all your monthly financial commitments in full and on time, which demonstrates to future lenders that you are a good customer to grant credit to.
“Potential homeowners need to check their credit scores regularly. They can get their credit profile free of charge and purchase reports for a minimal fee from the credit bureaus. A clean credit record is essential to getting credit, such as a home loan, from any financial institution.”
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Home loan pre-approval and valuation
Another important consideration, said Mabaso, is getting a home loan pre-approval. “Getting a pre-approval ahead of your home loan application can help you get a good indication of what you could qualify for.”
He added that this will help you search for a home within your budget.
It is crucial to check the valuation of the property. “Before a home loan is approved, banks conduct their valuation to ensure that the amount being borrowed is not far off from the property’s market value, in case the property is resold.”
Saving up for a deposit
“Having a substantial amount for a deposit demonstrates your ability to save proactively and increases your chances of getting approval in line with your positive credit score,” said Mabaso.
Ester Ochse, Product Head at FNB Integrated Advice, said: “Saving enough for your home loan deposit starts with determining the exact amount needed and setting a realistic monthly savings target for a certain period.”
Avoid taking on additional debt
She said many consumers may fall into the trap of thinking of taking more debt since the interest rate cuts, which is not advisable.
“People mistakenly assume that banks only monitor their credit profiles and perform updated affordability checks before the home loan approval process.
“Banks check for at least three months until the property registration process ends. Therefore, taking on additional debt or defaulting against credit providers can result in the bank repricing and, in extreme cases, declining the loan altogether.”
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