Increasing your chances of qualifying to buy property

Increasing your chances of qualifying to buy property

Are you looking to buy property? A real estate agent offers guidance on how to make sure you are eligible to receive a loan from financial institutions for your property. 

couple buying property with estate agent
couple buying property with estate agent / iStock

Buying property is one of the things many people aspire to do, because it gives one peace of mind knowing that you are staying in your own home. 

Others purchase property to do business.

However, the majority of people in South Africa depend on loans from financial institutions such as banks to help them finance their properties. 

Unfortunately, even if you see a property on the market and think you qualify, it is not always guaranteed that you will get a loan. 

Nunky Koma, a real agent estate at Keller Williams Realty, says the first thing to increase your chances of qualifying for a home loan is to avoid unnecessary debt. 

"The most important thing, please, please don’t spend money you don’t have," says the real estate agent. 

Many South Africans find themselves in debt. In 2022, DebtBusters revealed that consumers in South Africa need to spend around 63% of their take-home pay to service their debt. Another report by Mail & Guardian states that South Africans earning between R5,000 and R20,000 are drowning in debt.

READ: Three tips to help you get out of debt sooner

If you have debt, the agent says it is important that you ensure that you pay the minimum amount. 

"Don’t slip up with a payment on any credit account," she adds.

Another tip is that if you can't pay the full instalment on your debt, at least pay what you have and make arrangements with the financial institution or businesses that you owe.

This is because a missed or late payment can negatively affect your credit score. 

A credit score is used to evaluate the management of your existing credit, in other words, how well or badly you pay your bills. 

The credit score is what the financial institution you are applying to will use to evaluate how much credit you can get or if you even qualify for the loan. 

"Your credit scoring is everything," says Nunky. 

READ: Hack your credit score

In order for lenders to determine your credit score, you will need to have at least one account or some form of credit credit. Vehicle finance or student loans serve as good debts, especially if you manage your payments well. Debt that may increase your net worth and generate value on an ongoing basis is considered good. 

"To have a good credit scoring you need to have a credit account. If you have no debt at all, and have no credit account, you are also not going to get a home loan," says the agent. 

Lastly, she says if you know that an account will tempt you to buy things you don't need, rather be smart about it and open an account in a store you know you won't have to deal with lots of temptation. 

"So, open an account, but open an account at a place you don’t like. If you open an account in a shop you like, you’ll be tempted to spend too much money there, but if you open an account in for instance a clothing shop that doesn’t cater for your dress sense or size, you’ll most probably not spend a lot of money there. You at least know that you’ll buy one thing on credit there and pay it off very well to make sure that your credit scoring looks good."

READ: Rate hikes shouldn't deter potential home owners - expert 

Image courtesy of iStock/ @Paperkites

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