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Home loan dilemma

Feb 14 2013 07:51

A Fin24 user feels that wrong decisions in the past may affect his home loan application. He writes:

I have a credit score of 611 because of wrong decisions made in the past.

In the meantime, I got a job that pays above the average and want to apply for a home loan. Would I qualify and what advice do you have? 

Kay Geldenhuys, manager of property finance processing at ooba, South Africa’s biggest bond originator, responds: 

Banks require a clean credit record before they will consider approving your home loan application. 

The best thing that you can do is approach a credit rehabilitation company like Lucid Clear Credit, who can advise you on what steps you can take to improve your credit score.

Until your record is cleared, ensure that you don’t get into any further financial difficulties. Make sure that you pay back any credit like credit cards, store cards, car finance, and debts like doctors' bills on time and in full.

While there are steps that can be taken to rehabilitate a bad credit record, the best way to be financially healthy is to pay your bills on time and in full. This is also good practice for repaying a home loan.

In the meantime, you say that you are now earning well.

You can further improve your future chances of securing a home loan if you save up for a deposit.

As I have said before, banks will not consider a home loan application if the applicant does not have a clean record, but once yours is clean, a deposit will make the banks more likely to look favourably upon your application.

Then, to further improve your chances of approval, use the expertise of a bond originator to present your application in the best possible light to multiple banks and obtain the best interest rate.

 - Fin24

* For more property news visit Property24, SA's leading property portal offering houses for sale and property to rent in South Africa.

Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.

Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner. 

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