Beginning your house hunt without getting prequalified could leave you disappointed at not being able to afford the home you have fallen in love with.

We have all done it - dream shopping through expensive listings we know is out of our budget, dreaming about the day that we might be able to afford that Camps Bay mansion, but what if we fall in love with a property that we think we can afford? 

Imagine spending months looking for a home, you submit your offer to purchase and the seller accepts - the joy is overwhelming! Now imagine the feeling of the rug being pulled out from under you as you realise that you cannot qualify for the required home loan amount. 

That is why getting prequalified matters

While prequalification might seem like an unnecessary item of admin that you simply do not have the time for, buyers are regularly surprised by what they thought they could afford and what the banks would grant them when they finally reached that point in the process. 

"But we used an affordability calculator!" While they do a fantastic job of giving you a rough estimate of what you could afford, there is no guarantee that you will be able to qualify for that loan amount. For that kind of assurance, financial institutions would first need to run several credit and background checks before they could grant you an amount.

Financial institutions, therefore, provide a pre-approval facility that allows consumers the opportunity to discover what they can truly afford. Buyers can either apply at banks directly or use a bond originator that will guide them through the process.

What do I need for prequalification

To apply for prequalification you will need the following:

  • A copy of your ID
  • Your latest payslip
  • Three months worth of bank statements

Once issued, the pre-qualification will state the bond amount, interest rate, and instalment amount for which you qualify. However, buyers should be cautioned that these amounts are only 100% finalised after the bank has completed a property valuation and has received a signed Offer to Purchase on the property in question.

Not only will having a pre-approval certificate provide you with the assurance you need to begin your property hunt without any fear, but it also lets sellers know that you are a serious buyer. This often makes them more willing to work around your schedule when coming for viewings. But, by far the most important advantage is that, should it come to the point where more than one buyer has put in an offer, the pre-approval will boost the chances of your offer being the one that is accepted.