The current economic conditions are making it difficult for aspiring homeowners to secure bond financing and this, combined with their fear of rejection should they find their dream home, is why pre-qualification is essential.
Pre-approval can help take some of the uncertainty out of the buying process and guarantee that any offer to purchase is solid and credible, says Greeff Christie’s International Real Estate chief executive Mike Greeff.
“Getting pre-qualified allows you to get a realistic idea of the price range of properties that you can look at. It also lets sellers know that you are serious about your offer to purchase and that you have guaranteed access to the finances to make good on your offer. Being pre-qualified puts you in an excellent position to get the property that you are after.”
Getting pre-qualified will most likely happen via a bond originator, who will usually ask for your financial records in the form of your bank statements and payslips for the past three to six months. They pair this information with a freshly done credit check that provides your credit history, score and blacklist status, Greeff explains.
“This helps the originators establish how equipped you are to contend with monthly instalments that will possibly last for the next 20 years. Once the information is analysed, you are given a report and an amount that you qualify for.
“Maintaining a good credit score by having high disposable income and low debt figures will stand you in good stead with lending institutions and allow you to negotiate a better interest rate when borrowing,” he says.
The pre-qualification certificate that is issued is valid for three months and gives home hunters a three-month window to make offers that are within their range.
“The only proviso is that they will need to go through the application process again if anything concerning your financial standing changes within the three-month period.
The pre-qualification certificate can, however, be revalidated after the three-month period has elapsed, he says.
Greeff says buying property need not be daunting for first-time buyers and getting pre-qualified is highly beneficial.