Pre-approval

Boost your chances of becoming a homeowner with bond pre-approval

The saying "being prepared is half the victory" is especially pertinent when it comes to applying for a bond. Bond approval depends largely on what you can afford, so it's important to have an idea of your recommended price range based on your income and expenses before you start looking at homes to buy, says Carl Coetzee, CEO of BetterBond. "By applying for pre-approval you not only speed up your bond application when the time comes to put in an offer on a home, but you also increase your chances of bond approval." The approval rate for clients who pre-approved with BetterBond first is 90% of all applications submitted to banks on their behalf.

Pre-approval can be done online at no cost, and at a time that suits you, explains Coetzee. "You submit the same documents as you would for a bond application. The information is captured by a consultant on the other end, so the process is simple and easy." As this information is stored on your profile, it can be used for your bond application if you sign an offer to purchase within three months of receiving pre-approval, says Coetzee. "Also, the pre-approval application includes a credit check, so you will know whether you need to wait and improve your credit score before you apply for a bond. Having a good credit score will improve your chances of bond approval."

Once your application is approved, you will be issued with a pre-approval certificate that is valid for 90 days. "Although pre-approval does not mean that the bank has approved your bond application, it does give you an indication of what the big banks will be willing to offer you based on your affordability." It also proves to the seller that you are a serious buyer with the financial means to buy the home," says Coetzee. "This will strengthen your hand when it comes to making an offer on your chosen home; giving you the competitive edge when the seller has to consider other offers

The BetterBond pre-approval certificate includes the highest purchase price you can afford, as well as your possible bond repayments based on various interest rate and deposit calculations. "Although banks are giving 100% loans and even 105% loans in some cases, bear in mind that having a deposit does hold some sway when banks decide whether or not to approve a bond application. A deposit of even just 10% will also go a long way to securing a better interest rate," says Coetzee. The pre-approval certificate will also indicate additional expenses, such as bond registration and transfer costs.

"Using BetterBond's pre-approval service gives you a good idea of your purchasing power, so that you will know how much you can contribute towards this all-important deposit. This makes it possible to save more over the long term and put you in a better position to respond to future interest rate hikes," concludes Coetzee.