In spite of dire predictions from industry commentators regarding the fate of the Covid-19 housing market \u2013 a recent influx of home loan applications indicate that consumers have their sights firmly set on the residential property market.<\/p>\n
Rhys Dyer, chief executive officer of Ooba Home Loans, said that 100% bond approvals, lenient loan criteria and significantly reduced property prices are responsible for a recent influx of bond applications. In fact, the home loan industry is experiencing levels of activity not experienced in years – particularly among first-time buyers.<\/p>\n
However, bad debts and poor credit records have some wondering if they can afford a home – even in the most favourable economy.<\/p>\n
\u201cAs of September 2020, first-time home buyers represent 55% of Ooba\u2019s application volumes – up from the mid to high 40%. Most applicants (67%) are seeking a 100% bond application. In some cases, it\u2019s actually more cost-effective to buy than to rent in the current climate,\u201d Dyer said.<\/p>\n
Got bad debt?<\/strong><\/p>\n However, bad debts and poor credit records have some wondering if they can afford a home – even in the most favourable economy. According to Ooba\u2019s statistics, 8.4% of home loan applications are declined due to poor credit scores and 7.7% due to affordability.<\/p>\n Dyer said that understanding, correcting and where possible \u2018perfecting\u2019 one\u2019s credit score is the best way to secure a home loan. \u201cMany South Africans still don\u2019t know their credit score, despite all the free and easily-accessible online tools out there.”<\/p>\n \u201cIt often isn\u2019t until a home loan application is turned down that people realise that organisations are aware of their credit history, and that that history might be less than perfect,” he said.<\/p>\n The approach of \u2018get the debt now, deal with the repayments later\u2019, has led to an ongoing battle between consumers and financial institutions, often resulting in bad debts and a poor credit score.<\/p>\n What your credit score says about you<\/strong><\/p>\n A credit score rating of 600-plus is required to qualify for a bond. Rhys advises: \u201cIf you do not qualify, either because of a poor credit score, no credit score, or because you cannot afford the monthly repayments, you have a few options,\u201d said Dyer.<\/p>\n \u201cIf your credit score is the issue, you need to build up a good credit history. If you have no credit score, try to small retail accounts or a cell phone account, and pay it back on time and in full, if not a bit extra, each month.”<\/p>\n For those with a poor credit score, try to settle the outstanding debt as quickly as possible. \u201cBolster your credit score by paying your bills on time, by not taking out any further debts and reducing spend where possible,” the chief executive said.<\/p>\n If affordability is a challenge, Dyer suggests a pre-qualification to ensure that your affordability meets the bank\u2019s criteria. \u201cKnowing what you can afford will guide your decisions and save you a lot of wasted time in the long-run,” he said.<\/p>\n 10 Tips for improving your credit score<\/strong><\/p>\n\n
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