For Much Much Home Loan Do I Qualify For?

The most important factor to qualify for a Home Loan one would think is your monthly income. However, it’s worthwhile to keep in mind that only a third of the monthly income will be taken into account to pay your monthly installments. Accordingly if you were being paid a monthly wage of 15k, you will not be able to pay more than 5k per month, which actually means if you had to pay a higher installment every month, your application for a loan will be rejected.

Being younger than 60 years makes it easier for you to obtain a home loan especially if your credit rating is good. The bank or lending institution will take a look at your bank accounts and other payments such as hire-purchase and utility payment to check if they are up to date with no arrears. If you never had your vehicle or furniture repossessed due to non payment, you have even a much better chance of getting a bigger loan.

In order to qualify for a loan you must make sure that the loan you apply for is not higher than 80% of the value of the property you are hoping to buy. As explained earlier, the minimum value of the property should be at least R75K, be insurable and in a good state and the monthly installment that has to be paid should be less than one third of your monthly income. However, your monthly installment will depend on how much your loan is the time period you have chosen to pay up and the interest rate at that time.

In order to purchase the property you will have to allow at least 10% of the loan you hope to apply which does not include the advance or deposit you will be required to pay. Make sure to check out if there are other hidden costs that you might not be aware of at the time of applying for the loan.

You will also be required by the bank to obtain an insurance policy that will cover you against natural disasters or in the event of your sudden death which will help to pay off the loan. Life insurance is generally inexpensive and will be a means of helping those left behind to pay up debts and loans without having to undergo any unnecessary problems in case you are not there to sort them out.

Although home loans are usually granted for a 20 year period, it is possible to get an extended term for a period of 30 years which will mean having to pay only a small monthly payment against a short term and bigger monthly installment. A longer term of payment also means that you will be able to increase the total amount of your loan considerably.

You must do some research and explore all avenues to find out how much home loan you would qualify for keeping in mind the main factors such as your income, your credit and other liabilities against the possibility of paying off the loan as soon as possible in order to enable you to get the best deal with the least interest and longest terms available to pay up the loan.