Choose between the best Home Loans in South Africa – Apply

Choose between the best Home Loans in South Africa – Apply

Are you planning to buy a house in South Africa? Whether you want to buy it to live, invest or rent, buying a property can lead to stress fast if you don’t take certain measures. Unless you have saved enough money, you need to look for financial options to afford such purchase. This article’s aim is to focus on home loans and how do they work just to help you go through this process effortless.

How do home loans work in South Africa?

Homes loans work similarly to any kind of loans in South Africa. On one hand, there are requirements any applicant should pay attention to and, on the other, you may find some different alternatives that can be chosen. Once you get the money, you need to repay it respecting the term you and the bank set for your home loan. Besides, depending on the bank you select, you might even get 100% home loan. As there’s a lot to discuss about these loans, I’ll start by the requirements to go on explaining every detail you need to know.

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What do I need to qualify for a home loan in South Africa?

Qualifying criteria to get a home loan are harder to meet than for a personal loan, of course. Still, they may be similar. First of all, you should:

  • be at least 18 years old but, not older than 65. In some cases, older South Africans might be eligible for home loans.

  • be employed or receiving a permanent source of income.

  • Reside in South Africa and have a proof of address to verify it.

  • not having a low credit score.

Then, banks will be mainly interested in how you spend your money. So, if you are currently paying other debts, you should focus on cancelling them before applying for a home loan, as that will increase your chances of being accepted.

Can I use a home loan affordability calculator?

In order for you to know how much do you qualify for a bond in South Africa, I advise you to take advantage of loan simulators. Related to what I have told you previously, banks will pay attention to your net salary, which refers to how much of your salary is left after you pay your monthly expenditures and your deductions. That remaining amount will state your home loan affordability. There are, thankfully, home loan affordability calculators that show you how much money banks will accept to lend you taking that info into consideration. If you have that estimation, you can focus on searching for a property within that price.

How do I apply for a home loan in South Africa?

A home loan application has some stages you need to go through. Let’s see them step by step:

First, you need to get information about home loans and banks in South Africa.

Second, you should use home loan simulators to know how much money you’ll need to pay for it and, what’s your home loan budget.

Third, gather all documentation needed to prove you comply with the requirements.

Forth, apply for your home loan and submit those documents. Keep in mind, you need to present the property you want to buy’s information.

Fifth, if those steps go right, the bank eventually will do a property valuation to certify the house is worth what you stated.

Sixth, once the property valuation is set, you’ll need to sign off everything and wait until your attorney takes care of the bank doing the same.

You should remember these steps may differ If the bank decides they need to recheck any particular piece of information, for example

How do you get a bond approval?

Basically, your approval will depend on two things:

1. The home loan applicant meeting all the requirements. Remember, you should also submit the property’s documents.

2. The affordability assessment the bank will carry out for your home loan.

Now, it’s possible to get a pre-approval home loan which will simplify getting your funds. For instance, if you work with BetterBond home loans, they pre-approve your request to make banks be willing to accept your home loan application.

How long does it take to get a home loan approved in South Africa?

Due to the complexity of this kind of loan, approval tends to take few weeks. Bear in mind, you need to count from the moment you start completing the home loan application form until the bank goes over that form and your documents to decide.

How much deposit do I need for a home loan in South Africa?

The deposit for home loans represents a percentage of the house value to buy, so the sum of money you need will depend on that. You should know, though, it might even get up to 20% of the purchase price. Actually, there are banks in South Africa offering no deposit home loans, so getting a full house price loan is also possible. What’s more, you can also make use of a deposit home loan calculator to find out how much money you need to save for a deposit as regards the purchase price.

Do banks give 100 home loans in South Africa?

Keeping the zero deposit home loans, I want to talk to you about 100% home loans. As I said, that is possible in some cases, but first I want to make clear there are benefits of putting down a deposit for your home loan. If you can save some money, you should take advantage of it. But if you can’t, you still have a chance of buying your house. It’s more important than ever that your credit history be clean so as banks can rely on financing the entire home price. Some companies you can find this option with are:

What’s the interest rate on home loans in South Africa?

Interest rates for home loans works the same as any kind of loan. However, as the term to repay the loan back is longer, you accumulate more interest to pay towards the loan term. As a result, even though you might get a low rate to pay, you should know the total cost of a home loan will get expensive. You also must know, rates are regulated as well as loans, so your interest will be in accordance with the NCA, which is in charge of regulating loans in South Africa. Then, your past history taking out loans and paying bills and so on will get your interest high or low; high having a good credit history, and low having a bad history on your credit score. So, if you take care of cancelling your current debts, you might find the best interest rate on your home loan.

How is it possible to compare home loan quotes in South Africa?

Now, let’s assume you have a good credit score, so you’ll probably get some good home loan offers. How can you do to know which is the best? Easy, you compare those offers that interested you. In this situation, you should compare:

  • terms: if you’ll get variable or fixed terms, if you can do some extra payments or deposit, if you can choose to make a deposit, and so on.

  • interest rate: this is the most important factor, and you can compare it easily by using a loan simulator. Once you have a possible rate from the banks you’d like to apply with, you can compare them to detect the cheapest home loan offer.

How does a second bond work in South Africa?

When trying to get a second bond, applicants have a hard time. As all banks need to know is if the second-time home buyer will be willing to pay for a second bond, they get strict on the second bond approval. Even though it’s not impossible, you’ll get more obstacles than being a first-time home buyer. You must bear in mind, you’ll probably be paying both bonds at the time, so the first thing you should do is to be completely sure your income can afford to pay the total amount before even starting the second bond application procedure. 

What is a joint bond and how does it work?

If you are about to get a house for you and your family, a joint bond might call your attention. It’s also used when buying properties for investments, so if you’re doing it with a partner, it also works for you. A joint bond is when more than 1 person take out the loan, and in turns, they are all responsible for cancelling fees and installments. The main advantage is that, as you join incomes, your quote affordability might be higher. If you want to joint bonds, you need to clarify it when you go over the home loan application for the bank to take care of managing.

What are the most common home loan payment options?

Nowadays, as technology is used to speed things up, it’s common loan installments be deducted from bank accounts. Specially if we talk about home loans because we assume those installments will be high. So instead of having to take much money from one place to another, you can be calm knowing it will be taken from your bank account without risking losing it or being stolen on the way. Just remember to have the amount of money available in your account on the date it should be debited.

Are initiation fees charged for home loans?

Yes, they are. You should be notified about the amount to pay for the initiation fee before you sign the home loan contract, and remember you shouldn’t pay anything before the loan is granted. Not even the initiation fee, so if you are asked to give some money in advance, you should by no means take that credit provider seriously. Just look for a registered credit provider to make sure you’re in good hands and you won’t lose your money.

Do all banks offer payment holidays on home loans?

No, not all of them have that benefit. Actually, it’s rarely found on home loans. If you are not sure how skipping payments work, I’ll explain it. Some banks might allow their borrowers to take a month off payments, as long as they notify it beforehand. The thing is that for home loans this option is not usually available. All the same, ask your bank if this is an option to have it in mind when deciding.

Home Loan protection cover: Is bond insurance compulsory?

Getting insurance on home loans is a service most banks include in the package, as they want to be sure the loan will be cancelled no matter what. As regards the benefits for you, you’ll have some piece of mind knowing that your love ones won’t have to worry about that in case of a misfortune, for instance. What’s more, you might also get covered in case you are disabled, for instance, which will be a great help when going through such hard time. So, for home loans, you’re likely to get insurance because of the great risk banks take when issuing them.

Is it easy to get home loans from private companies in South Africa?

I can’t say getting a home loan is easy in South Africa. We are all aware of the complication involved in this type of credit. All the same, you don’t need to panic because there are myriad of loan products to give you what you need.

The first thing you need to check is that your home loan lender has proper permission to issue credits. If they do, you’ll be protected by South African NCA in terms of rights as money borrower.

Are all home loans secured in South Africa?

Referring to the typical home loans, yes, they are all secured. Remember we are talking about a large amount of money to ask, so any lender will force you to present some sort of guarantee. Typically, credit providers ask the bought house to be the bond security: if you fail to comply with the home loan contract, your credit provider will keep the house as payment.

Are home loans in South Africa specifically issued for teachers?

South African teachers, being considered government employees, might find some home loan alternatives. There’s the Government Employee Housing Scheme which can be found in some of the most important banks and credit providers of South Africa. For instance, ooba and SA Home Loans are 2 of them. Such program was set to adapt home loans to encourage public service officials to be the owner of their house by supporting and educating them on viable financial options.

Can I take a consolidation loan using my existing home loan? Is this possible in South Africa?

Yes, that is a possibility. If your payment loans are getting complicated and you’re looking to get your finances straight, you might use your home loan as collateral of a consolidation loan. However, in order for this to be an alternative, you must have equity to access to in your home loan, as equity is what can be used as security of the loan. Remember that consolidation loans can be a relief, but you shouldn’t neglect instalments and try your best to be on the right financial path.

Can I extend my bond house?

That possibility exists, but it will depend upon few factors:

  • the bank you take the loan.

  • your credit assessment.

If the bank allows it, they’ll check if you can take additional funds on your existing home loan.

Different types of home loans in South Africa

1) Home Improvement loans, are they useful in South Africa?

If you already own your house, but you need to make some renovations, you might have some loan options available. An option to improve your house can be a home loan specifically thought to do that. You’ll find some companies offer this alternative. But if you prefer a personal loan, it might also work to do some house renovations in South Africa. Your decision should be taken according to how much renovation you want to do, and how much money you’ll need to do it. It might also depend on the type of improvement your house needs. For example, if you want to add a new room or just change your kitchen.

2) When is a building home loan necessary in South Africa?

Following what I have just said, building loans might work in 2 cases:

  • to add a spare room to your existing house.

  • to build the entire house from scratch.

Standard Bank home loans include an option to build a house, so it might be your solution. They’ll request you to present a title deed or an offer to purchase in case you’re about to buy the land. Also, you need to have your builder quotation so as to allow Standard Bank study your case to approve your building loan request.

Home loan vs Building loan, how do they differ from each other?

The principal difference between these 2 alternatives is whether you want to buy a house already built or if you own land and want to build your dream house on it. If you haven’t made up your mind about this, you should figure out if you want to go over the building process, which will surely be long, or you just want to have your house. Then, you should also compare the costs for each alternative and make sure you can pay for the option you choose.

3) How do home loans for contract workers work in South Africa?

As contract workers, you surely know being accepted for a home loan request has its own obstacles. You might have a good income, but the bank finds some difficulty on trying to verify it. Although you’ll have to take some additional measures, it won’t be impossible to get a home loan if you’re a contract worker. You will have to do your best to prove your income is stable and high enough to pay your installments. It is possible banks ask you to verify you’ve earned a high amount of money for over an extended period of time, so as to check you enjoy economic stability.

4) Which bank offer home loans for low income earners in South Africa?

Another type of workers that might get it hard when trying to get a home loan are those who earns a low income. Fortunately, there are some banks covering this group of South Africans.

Standard Bank is one of them. There, you’ll find their DreamStart home loan aimed to make house purchasing affordable for you. Before starting the process to apply, they will have an interview with you to know where you stand financially and discuss about your options.

5) Is it easy to get home loans in South Africa being first time buyers?

Those who have never taken a home loan before are likely to have better chances of being approved. You will find there are multiple home loan offers for you as banks will try to get your attention to make you choose them. The best you can do is to use a home loan calculator to compare your different alternatives and go for the cheapest. As you’re not paying for a home loan instalment yet, banks will consider you can go over payments properly. This, clearly, as long as you have an outstanding credit score.

6) Tips to get home loans if you are a business owner in South Africa

Business owners and sole proprietors trying to get a home loan goes over the same as contract workers as they are seen as self-employed workers. Because of this, banks may hesitate on the home loan approval as they find it hard trusting on business stability. All the same, here you’ll have tips to get closer to make your house ownership dream come true:

  • benefit from home loan affordability calculators to know and keep to your budget.

  • make sure to prepare your documents right: notice you’ll have to make an effort to prove your stream of income is consistent to make banks trust on you.

  • do your best to cancel as most current loans and bills as you can before applying.

7) Switching home loans in South Africa – All you need to know about it

More often than you think, home loan borrowers find they might get a better offer when they are already paying for an existing home loan. If this is your case, you should know you can switch your home loan to another bank. It’s imperative you start by using a home loan switch calculator to show you if switching bonds is in fact a smart decision. Bear in mind, if you do it, you must pay some transfer fees, apart from all regular fees charged for home loans. This is why you need to calculate how much money would you save before switching, as sometimes terms are attractive but the transfer cost ends up by being more expensive.

Basically, the principal benefit of switching home loans is that it can make you save money. So, if the cost of switching is higher, you might just stay where you are. I have to warn you, bond registration and transfer time are not short. After all, you’re making a new home loan application for which steps must be taken.

8) What is a reverse equity mortgage? Is it available in South Africa?

This special kind of home loan has to do with being allowed to take a part of the equity in cash to use as you need to. The difference is that instead of repaying it monthly, you cancel this loan once you sell your house. Although it’s rather new in South Africa, banks are getting familiar with this option to make it available in our country.

9) Do banks finance vacant land?

Although this loan is not so easy to get because of the high risk that represents to banks, it is possible to find it. Absa, for instance, is one of the companies issuing vacant land loans in South Africa. You will find this alternative in their building loan options, as they offer to help you whether you already have land to build, or you need to finance it. In fact, Absa will make just one loan for both, buying the land and building the house.

10) Can I take a loan to buy an investment property in South Africa?

Once again, I’ll mention Standard Bank because they dedicate a sector to assists South Africans that look for real state finances. Of course, you can use a home loan to purchase a property you want to use as investment, but you must keep many factors in mind before doing it. To start, think about the chances you have to make profit from that property. For example, if you think about renting it. Then, once you have a clear idea of your profit possibility, you can refer to Standard bank’s assistant to get your home loan.

11) What does a bond originator do?

You have read about bond originators, right? It’s another way you can take to get home loans. A bond originator will take over your home loan application process to facilitate you get the best offer for you. As you’ll find a myriad of alternatives, you can organize them with a bond originator’s assistance. So, they work like this. You apply once with them, and they send it to their credit providers to analyze your home loan petition. Then, you will have to decide which of the home loan offers you receive to accept.

Top bond originators in South Africa

Nowadays, bond originators are popular among those South Africans that are determined to get a house on their own. Probably, the most popular of them is BetterBond, as they’ve been in this business quite a time now, and have improved their service. None the less, ooba is another bond originator gaining ground in South Africa. You may read about them to see which is the best bond originator according to what you are looking for.

What can Blackrock Home Loans offer in South Africa?

Blackrock Home Loans is a company that’s willing to be your helping hand when it comes to buying property. No matter if you want to buy a house to live in it or to invest, they can be the perfect economic support. Besides, they offer as much as further and re-advance loans as bridge loans. We all know these are precious alternatives to take our home loans finance properly. Another great advantage is that they also have vacant land loans. Clearly, they have quite a full home loan package to help you with.

Does Builders offer cash loans?

Builders is an online shop where you can buy everything you need to build your house and furnish it later. In addition, they offer cash loans of around R200000 if you need a little push to finish building your house, for example. Clearly, it won’t be enough to buy a property, but it might work to make some home improvements, or remodel your house. In just 60 months top, you can cancel this money borrowed, and enjoy from your renovated home.

How can I know which bank offers the best home loans in South Africa?

It’s obvious you will want to get the best bank for home loans in South Africa. The thing is I can mention the most popular ones, but it will be up to your common sense to detect which is the most convenient for you. You’re the one that knows exactly what you need and what you can afford. I’m sure now you are ready to review this article and the different home loans companies I referred to in order to choose the right one.

To wrap this article up, I can only remind you to ask me any other question you have as regards home loans, so I can provide you a precise answer.

Preguntas Frecuentes

Does the number provided belong to Standard Bank?

No, it belongs to Ned Bank

Does the company set the requirements or are they typical of the loan itself?

The companies tend to establish their own requirement criteria.

Do I need collateral for mortgage loans?

Not necessarily. It depends on the loan that you choose.

Does BlackRock home loan allow me to build a house in a rural area after a home loan acceptance?

The financial company Black Rock Home Loans usually provides clients with mortgage loans in order to buy properties. They also offer bridge loans, which are short term lines of credit. However, the company does not clarify if you can obtain money to build a house in a rural area. The recommendation, though, is to communicate with the entity by phone and ask for more information, as there might be other alternatives as regards home loans financing programs.  

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