Pre-approved Homeloans

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halfmoonforever

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Hi,

In 2014 I was looking to buy my own place again, and couldn't get anyone to do a pre-approval like I was able to get back in 2006. Apparently I would need an offer to purchase first before any kind of application can be made, which obviously delays the entire process especially when you're fighting for the best interest rate deal (which resulted in the loss of the property I wanted to purchase in 2014)

I've read in the past few months some of you folks have been able to get pre-approval (on principle) from the banks?

Which banks are they? Can I just contact my private banker at FNB to get the pre-approval? Or did I misread those who got a "pre-approved" loan?

Thanks!
 
halfmoonforever said:
Hi,

In 2014 I was looking to buy my own place again, and couldn't get anyone to do a pre-approval like I was able to get back in 2006. Apparently I would need an offer to purchase first before any kind of application can be made, which obviously delays the entire process especially when you're fighting for the best interest rate deal (which resulted in the loss of the property I wanted to purchase in 2014)

I've read in the past few months some of you folks have been able to get pre-approval (on principle) from the banks?

Which banks are they? Can I just contact my private banker at FNB to get the pre-approval? Or did I misread those who got a "pre-approved" loan?

Thanks!
Click to expand...

They will "approve in principle" but its not a pre-approved loan. As far as I understand the NCA has made that type of thing impossible.

Plus the value they approve in principle will probably be higher than they will actually give you.
 
Just went through this with FNB. Through their PropertyLeader website you can apply for "pre-approval", but nowhere on the form does it use the words pre-approval. Instead they say that you are "Approved in Principle" with a long list of disclaimers.

The amount is just one third of gross income.
 
Having worked in retail banking I can confirm that SA banks are no longer able to offer you a pre-approval. The closest you'll get to that these days is with Nedbanks Instant Bond Indicator tool. It does a credit check with the bureaus and affordability calculation based on the figures you put in. Full Disclosure: I recently applied for my bond with Nedbank via their digital home loans channel and it was by far the most painless interaction I've had with a bank. Filled in the online app one evening, uploaded my docs and by 12pm the next day had an approval in principal subject to property valuation.
 
halfmoonforever said:
Hi,

In 2014 I was looking to buy my own place again, and couldn't get anyone to do a pre-approval like I was able to get back in 2006. Apparently I would need an offer to purchase first before any kind of application can be made, which obviously delays the entire process especially when you're fighting for the best interest rate deal (which resulted in the loss of the property I wanted to purchase in 2014)

I've read in the past few months some of you folks have been able to get pre-approval (on principle) from the banks?

Which banks are they? Can I just contact my private banker at FNB to get the pre-approval? Or did I misread those who got a "pre-approved" loan?

Thanks!
Click to expand...

If you sign an OTP it will have a time period for you to get a homeloan (normally 21 days). Once the OTP is signed by both parties it is binding until the expiration date or if a suspensive condition is met. So you will have at least 3 weeks to get a homeloan and fight for the best rate, and you cannot lose the property in that time.
 
FNB does the "Approved in Principle" thing before you sign an OTP. I got one 3 weeks ago through their FNB property Leader Website.
 
Does anyone know of a bank that will do pre-approval for companies and trusts?
 
Pakka said:
Does anyone know of a bank that will do pre-approval for companies and trusts?
Click to expand...

I'm trustee of two trusts, both of which have just recently gone through the process of purchasing property. Let me just say banks are real anal when it comes to trusts and loans.
 
halfmoonforever said:
Hi,

In 2014 I was looking to buy my own place again, and couldn't get anyone to do a pre-approval like I was able to get back in 2006. Apparently I would need an offer to purchase first before any kind of application can be made, which obviously delays the entire process especially when you're fighting for the best interest rate deal (which resulted in the loss of the property I wanted to purchase in 2014)

I've read in the past few months some of you folks have been able to get pre-approval (on principle) from the banks?

Which banks are they? Can I just contact my private banker at FNB to get the pre-approval? Or did I misread those who got a "pre-approved" loan?

Thanks!
Click to expand...

I recently went through the process - thought I could use "Pre-Approval" as a bargaining chip with the seller, however, I'm sad to say that it's a thing of the past now. ALL the banks are only willing to go as far as "Approved in principle" without the signed offer.
 
Everything that the others have said is true. I'll tell you a bit about my experience of buying my first house in the past year:

A little over a year ago, I went to BetterBond (a bond origination company) to get 'pre-approval'. They pre-approved me on my own (without my partner's info) for R800,000 and roughly a prime interest rate. The agent I worked through made it clear that this didn't mean I would for-sure get a loan for that amount, but that I would probably be safe looking for a house in this ball-park.

A few months after that, my partner and I decided to start looking for a house that we would buy together 50/50. When we found the house, we made an offer for R1,000,000—assuming this would be well under our means because I alone was approved for R800,000. In reality, no bank was willing to give us a 100% loan. The best we got was ABSA giving us a 90% loan.

So what did I take away from this:

1. The pre-approval amount, is a ball-park estimate. It is more of a guide to make sure you're not looking at houses that are way out of anything you could ever get a loan for.
2. I believe that part of the reason, no bank was willing to give us more than R900k is because both my partner and I have non-traditional forms of employment. My partner was self-employed, and even though his company had all of the necessary financial documents in order, the company was only 3 years old and deemed risky still. I, myself, am on a contract with a foreign university. So even though, I earn Euro and my income is more than enough, I am also seen as a risky investment by the bank. Moral of the story: the pre-approval does not take into consideration these other circumstances that may affect your ability to get a loan.
 
The pre-approval (or approval in principle) amount is basically one third of your gross income.

We put in an offer on a house last week and we made sure to stay well, well, below the approved in principle amount.

Remember, that amount does not take into account ANY other factors. Not you current living expenses, not your car, insurance, internet,netflix, etc payments. Remember that there are a lot of hidden costs that you will have to budget for that is not included in the pre-approval/approval in principle amount.
 
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