Home Loan qualification questions

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Ancalagon

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Hi all,

I am looking into buying a house sometime in the next year or so. I just want to ask about how one qualifies for a home loan.

Currently I am employed on a 12 month contract. So, its sort of permanent? They handle my tax and provide more than 80% of my income. Its an 8 to 5. Will this cause problems with getting a loan?

I can provide a greater than 10% deposit and have a pretty good credit record. Will that help with their decision?

Also, how long does the process usually take, from when you start looking to when you move in?
 
Ancalagon said:
Hi all,

I am looking into buying a house sometime in the next year or so. I just want to ask about how one qualifies for a home loan.

Currently I am employed on a 12 month contract. So, its sort of permanent? They handle my tax and provide more than 80% of my income. Its an 8 to 5. Will this cause problems with getting a loan?

I can provide a greater than 10% deposit and have a pretty good credit record. Will that help with their decision?

Also, how long does the process usually take, from when you start looking to when you move in?
Click to expand...

The contracting might be a bit of an issue. You will qualify if what you mention is true but only 80% odd. Don't know anyone who has gotten more. Lady at work just went through the same thing.
 
No, sorry I meant 100%. I've heard that more than 80% is sort of a benchmark.

Basically is a 12 month full time contract position.

EDIT: Did she get the loan?
 
She did get the loan but 80% by herself and 90% with her sister as surety.
She is also on a 12 month full time contract position.

I should mention that she doesn't have the best credit so you may be a little more lucky.

Only FNB and Nedbank would give her the loan. Std Bank and ABSA said no. She was working through a bond originator.

EDIT : So rather apply and see what they say. I don't think the offer expires and you'll know what your budget for a house is.
 
You should be fine on a 12 month contract as long as your credit rating is acceptable.
 
Thanks.

With the 80-100% thing, I did not mean the loan to value ratio. I meant what percentage of my total income, my contract position provides. My contract position provides all of my income. Sorry I worded that badly.

I'd be needing a 90% loan I think.
 
Pho3nix said:
She did get the loan but 80% by herself and 90% with her sister as surety.
She is also on a 12 month full time contract position.

I should mention that she doesn't have the best credit so you may be a little more lucky.

Only FNB and Nedbank would give her the loan. Std Bank and ABSA said no. She was working through a bond originator.

EDIT : So rather apply and see what they say. I don't think the offer expires and you'll know what your budget for a house is.
Click to expand...


You can only apply for a loan if you have a signed offer to purchase...
 
You can get a pre-approved loan.
All you need is the Loan amount and your details.

I bought my house with a pre-approved loan.
 
They don't do pre-approved anymore...

They will give you an idea of what they THINK they will give you... then when you sign an OTP based on that, you will find out that the bank would never give you that much money and you will look like a complete idiot.
 
Pho3nix said:
She did get the loan but 80% by herself and 90% with her sister as surety.
Click to expand...

NB: Be very careful with the new sneaky tactic of the banks in regards to surety. In the contract you will probably find that the sister signed surety for not only the bond but also any other debt incurred. Make sure you read the surety contract carefully. Be warned...
 
I don't mean to sound negative, but I will be very very surprised if they gave you a loan. Banks do not want to give loans to contractors, and if they do, they require a huge deposit.

I have had this experience and unfortunately had no choice but to pay the deposit. I hope you have better luck.
 
F1 Fan said:
I don't mean to sound negative, but I will be very very surprised if they gave you a loan. Banks do not want to give loans to contractors, and if they do, they require a huge deposit.

I have had this experience and unfortunately had no choice but to pay the deposit. I hope you have better luck.
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Not true. A couple (read more than 10) people that I work with have gotten home loans while they were contractors. It's easier if you've been with the same company but aslong as you've worked there for 6 months you have a smidge of a change.
You can also buy a car too albeit you might get a inflated interest rate.
 
Pho3nix said:
Not true. A couple (read more than 10) people that I work with have gotten home loans while they were contractors. It's easier if you've been with the same company but aslong as you've worked there for 6 months you have a smidge of a change.
You can also buy a car too albeit you might get a inflated interest rate.
Click to expand...

Alrighty, as I've stated, it was my experience. Also, I was not willing to consider loans with crazy interest rates, so the final offer I took was 7.95%. This was November 2012.
 
Pho3nix said:
Not true. A couple (read more than 10) people that I work with have gotten home loans while they were contractors. It's easier if you've been with the same company but aslong as you've worked there for 6 months you have a smidge of a change.
You can also buy a car too albeit you might get a inflated interest rate.
Click to expand...

Alrighty, as I've stated, it was my experience. Also, I was not willing to consider loans with crazy interest rates, so the final offer I took was 7.95%. This was November 2012.
 
Use someone like Ooba to apply for loans.

Makes life a hell of a lot easier.
 
I got approved earlier this year. At the time I was on a 5 month contract(~2 months in). I received pre-approval for the amount I wanted and then sent them the signed OTP to finalise things. The rate I got was 7.75% and it was a 100% loan.
 
So what kind of rate should I be going for? 7.75%?

Also, do you guys have your bond interest rate pegged to the prime interest rate, or fixed? Which is better?
 
Mine is linked to prime.
I have seen some products with fixed rates but it will only be fixed for 3 years and not for the bond period.
As to the rate that you should go for, shop around and see what offers you get.
 
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