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Owning property instead of paying rent seems like a sensible thing to do, especially considering that your rent payments are going towards paying off your landlord’s monthly bond repayment.
This is particularly true when your rent amount is equivalent to the monthly bond costs – an amount that you could be paying towards your own property.
While some married couples or committed partners have the choice of applying for a joint bond to finance their home, single people often have to go it alone.
Tommy Nel, head of credit at FNB Home Loans, says that ‘single applicants’ refers to customers who apply individually even if they are married with an antenuptial contract.
However, this excludes marriage inside community of property, as a joint bond application would be required in this case.
Unless you have money saved up to buy property for cash, single property buyers will have to approach the banks for a home loan.
These institutions do not view applications by a single applicant or joint applicants as different, and many of the considerations for a home loan application would be the same.
Nel says that about half of FNB Home Loans’ new business, by volume, comes from single applicants. By value, single applicants account for around 45% on new business levels.
Bronwyn Johnson, head of marketing at Ooba, says that in order for single home loan applications to be successful, the following things need to be taken into consideration.
Applicants should make sure that they have a clear credit record with all their accounts paid up to date, and they need to have sufficient income to cover all home-related expenses.
This includes monthly bond repayments, rates and taxes, transfer costs, repair and maintenance costs, and moving costs.
If possible, they should have some money saved for unexpected expenses and repairs to the home, she says.
Lesiba Mooka, founder and CEO of Cobalt Blue Properties, says: “Single bond applications have not been that good mostly because of the applicant’s financial conduct in the past. Most of them have had bad payments of loans in the past, which are reflecting and it makes it difficult for banks to approve the home loans.”
Nel says where possible, applicants, whether single or joint, should try to pay a deposit towards their home loan as this will improve their chances of being approved for the loan, as it demonstrates a proven ability to live within their means or build wealth.
This will also assist the applicant to obtain the best possible interest rate on the home loan.
This is an excerpt from an article that originally appeared in the 9 April 2015 edition of finweek. Buy and download the magazine here.
