Could Wedding Bells Be the Death Knell for Your HOME LOAN
Johannesburg, 26 July 2020 – It’s no longer a moot point whether or not home loan applications will be negatively affected by the current worldwide COVID-19 pandemic and the economic implosion in South Africa. The consensus is that weak economic growth, coupled with accelerating inflation, will inevitably result in a significant drop in home loan approvals for the foreseeable future.
BANKS LESS KEEN ON LENDING
“In the current economic climate, SA banks will face higher capital-reserve requirements. They will, therefore, want to ensure that they take on quality business and will no doubt become more particular when assessing new credit and loan applications.” Says Shaun Rademeyer, CEO of MultINET Home Loans.
It is therefore critical that you do not do anything to derail your home loan application during the registration process in these tight trading conditions.
GETTING MARRIED COULD HOLD A FEW SURPRISES
Once you apply for a home loan in your individual capacity, just like your MultINET consultant will advise you not to make any additional debt before a bond registers, it is best not to make any marital status changes until your bond has been registered. If you intend on getting married while the bond is being processed, you could be in for a surprise…your home loan could be declined, reassessed or cancelled if your marital status changes.
If you get married before the bond registers and depending on your marriage type you may have to add your spouse as a co-applicant. This could delay the transfer process, an amended Offer to Purchase (OTP) would need to be signed to include your spouse as a co-purchaser to the sale agreement, and your home loan application would also need to be referred back to home loan credit for re-assessment to include your spouse as a co-applicant. If your spouse’s credit score and affordability is in order, an amended instruction will be forwarded to the bond registration attorney to draw up the bond documents and the same would be applicable to the transferring attorney as per amendment and the transaction would proceed.
However, if your spouse has a poor credit history not limited to bad debt only or negative affordability, your home loan application could be declined. Depending on how far along in the process the transaction was, you could also be held liable for wasted costs. All is however not lost, in the age of Corona weddings are restricted and ensuring the safety of your home loan is a valid reason to postpone the wedding until you can have a magnificent event.
Shaun Rademeyer, MultINET Home Loans CEO, has the following advice for clients planning on applying for a new home loan:
- Do a proper income and expenditure budget, so that you are fully aware of the state of your personal finances.
- Get pre-approved from a reputable mortgage provider, which will also help establish what type of deposit you will need to put down.
- Once you know what you can afford, try to establish whether houses in that price range meet your desires and requirements.
- If the property you are considering is out of your price range, carefully re-evaluate your monthly expenses to assess where you may be able to save extra to afford a bigger home loan. If not, play it safe in a realistic price bracket.