A home loan approval and your credit score go hand in hand
PUBLISHED 31 DEC 2020
With low interest rates and a property market that still favours buyers, in many respects now could be the ideal time to purchase a Cape Town home.
However, in order to qualify for a bond you’ll still need to meet certain affordability requirements and meet the eligibility criteria. One of the most crucial components of bond eligibility is a good credit score - but how do you know if your numbers are high enough for home loan approval?
If you’re a first time bond applicant or you haven’t checked your credit score in a while this article should give you the basic information you’ll need before you proceed with your application.
How credit scores work
Every South African adult who makes use of financial services should have a credit score associated with their identity.
This number - which ranges between 0 and 999 - is an indication how well you manage your debt repayments.
Factors like how much you owe relative to your total available balance will determine your credit score and determine the risk a lender will be taking if and when they extend you credit - including a home loan.
In order to qualify for property financing it’s generally accepted that your credit score should be 600 or more. The closer your score is to the maximum value of 999 the better your chances of approval will be.
You can check your school by obtaining your free annual credit report. Once you know what your numbers look like you can take the following steps to improve them if necessary:
Pay down your credit card balances
Check your credit report for errors and have them corrected
Close dormant accounts that you no longer use
Keep your total credit use below 30% of your total available balance
If you’re a first-time buyer looking to invest in a Cape Town home, contact us today to ask us all the questions you might have about making that first investment and to view our portfolio of residential properties. Image credit: https://pixabay.com/photos/house-money-euro-coin-coins-167734/