Professions Play Role in Home Loan Approval - 04-09-09

April 9 - South African buyers looking to enter the property market or take out a bridging loan as they prepare to buy their second property, should not be surprised if their application is subject to extreme scrutiny by the banks.

Today's banks are not jumping to approve all home loan applications and some put the declining rate at up to 60% in many areas.

One thing that banks look out for when considering a home loan application is the applicant's profession. Banks want to make sure that in today's tough economic climate, buyers don't run the risk of losing their jobs and then default on their payments.

As a matter of policy, banks will consider the risk rate of approving home loans to people in certain professions. The bank will also use its information gathered on the history of credit defaulters to establish whether a specific profession is a 'high risk' or not.

Self employed South Africans would have to prove beyond a doubt that their income will be able to support their claim for a home loan application. While employed buyers have their salary slips to turn into as proof of income, the self employed will need to supply endless information in order to satisfy the banks that they are capable of meeting their monthly payments.

Banks will not hesitate for a moment to immediately decline any applicant that cannot show at least three months of uninterrupted income. In some cases, the banks will ask for supporting documentation, but in most instances, the applications will be denied on the spot.

South African banks are also demanding greater deposits, with some even going as high 30% of the value of the property.

An average home loan application process takes up to a month and can be a nerve wracking time for potential buyers and property sellers who depend on the approval to finalize the sale.