Your Approved Home Loan Could Be Withdrawn
16 April 2020, Johannesburg – The reality of life during and post-COVID-19 has not fully sunk in yet, and its consequences for our businesses, organisations, economy, and society will play out over the rest of 2020 and beyond. We have probably all heard this many times by now, but the world is in unprecedented times.
We are in the midst of a global pandemic, countries are shutting borders, and lockdowns are becoming our daily norm. Did we ever think we would be here four months into this new decade that promised so much? The most important thing right now is that we all stay safe as individuals, and do our part to help curb COVID-19.
Your bond was approved and you were looking forward to moving into your new home or you already moved in and were just waiting for the sale to be registered and then the unimaginable happened, President Cyril Ramaphosa put the whole country into lockdown bringing everything to a screeching halt.
Shaun Rademeyer, CEO of MultiNet Homeloans warns that due to the unusual and uncertain circumstance we find ourselves in it is normal practise for deals to be re-assessed if affordability has been negatively impacted or the time line to register a bond has been exceeded.
“Home loan customers are often not aware that some banks may continue to monitor their credit profiles and perform updated affordability checks up until bond registration. This means consumers taking on further debt after they have received a home loan approval with sudden changes in earning potential or employment status may find that the approved home loan amount is reduced, repriced or declined all together,” highlighted Shaun.
According to Rademeyer, banks and home loan originators have found that customers are often unaware that taking on further debt after their home loan has been approved or financial crisis such as the one, we find ourselves in currently, can prompt a review of the home loan application. “Banks continually re-assess loans that they have approved in the window up until the bond registers in the Deeds Office and the property is transferred into the new owner’s name.”
Taking on more debt or change in employment status.
If any new adverse information is listed against an applicant during the bond registration window, including missed payments, defaults, change in employment status, salary cuts or additional debt taken on, can trigger a review process. This process will take the recent information into account reflected on the credit profile, including any new debt obligations.
“This can result in repricing of the home loan, a lower amount offered or, in some cases, even a complete decline of a previously approved loan. This can obviously be a very distressing experience for prospective homeowners. However, the reassessment is necessary to protect the interests of both client and bank,” explained Rademeyer.
Furthermore, overextending credit puts the homeowner at the risk of foreclosure, which, according to Rademeyer, some consumers never fully recover from, as there is likely to be a shortfall on the loan, they are still liable for. In addition, it can also impact on their good credit rating, which can negatively affect their ability to rent a property due to the credit check carried out.
If your loan has been reassessed and declined all is not lost, you could always try reapply for a home loan with the assistance of a bond originator such as MultINET Homeloans. MultINET helps buyers through what can feel like a daunting process and builds relationships with people on their property journey in these most unusual times.
5 Things to do if your approved home loan is withdrawn from the banks
1. Inform your transferring attorney of the situation
2. Find out from the bank why they have re-assessed and declined the application
3. Negotiate an extension with the seller
4. Phone MultINET home loans to assist with resubmission or finding alternative finance
5. Ensure that no additional debt is taken on during this process