How the bank approves a home loan

Banks can change their lending policies at any stage without notice. Policies differ from one banking institution to another, however not to a great extent, and the following is the general policy of banks that grant home loans:

• Deposit is required in most instances varying from 5 – 25%. There are instances where banks will grant an applicant a 100% bond.
• Clear credit bureau checks on all applicants. Banks will consider if listed items are settled and proof supplied. They are often reluctant if a listed default is still being paid over to the creditor.
• Gross income is used to qualify applicants(s). A small percentage of regular overtime, rental income, travel allowances and other regular monthly benefits may be added to constitute gross income.
• Banks ensure that not more than 30% of an applicant(s) gross income is allowed toward a bond repayment. (Refer to our Bond Calculator to determine the amount of bank bond you qualify for).
• Besides the above 30% calculation, the bank will also perform a net disposable income and monthly expenses analysis with the applicant(s) to ensure affordability.
• Once all above in order, the bank will send out an assessor to the property to determine value, and if happy, they will grant the bond (which they now called an Acceptance of Loan Quotation), together with the terms and conditions for the applicant(s) to accept or reject.
• Where the applicant(s) gross income is insufficient to qualify for the bond amount requested, banks will consider personal suretyships, e.g, live-in brother or sister. In these instances the bank adds the surety’s gross to the applicant’s, thereby increasing the chance of qualifying for the bond.