In recent years, South Africa has witnessed a series of interest rate hikes as the South African Reserve Bank (SARB) took measures to curb inflation. However, a notable shift occurred in September 2023 when the SARB decided to leave interest rates unchanged.

The potential for further reductions in 2024, if the inflation rate continues to decline, opens up new opportunities for aspiring homeowners, but they need to make sure they are well-positioned to take advantage of these favourable conditions, says Antonie Goosen, principal and founder of Meridian Realty.

Goosen says aspiring homeowners needs to stay informed and plan strategically when preparing to apply for a home loan. “Keep a close eye on economic indicators and interest rate trends. With potential rate adjustments on the horizon, being informed will empower you to make strategic decisions regarding the timing of your home purchase.

He says it is important to also strengthen your credit score. “A strong credit score is crucial when applying for a home loan. Take proactive steps to improve or maintain your credit score by paying bills on time, reducing outstanding debts, and correcting any inaccuracies in your credit report. You also need to save for a healthy down payment. While interest rates may become more favourable, having a substantial down payment can still positively impact your mortgage terms. Start saving early to secure a sizable down payment, demonstrating financial stability to lenders,” says Goosen.

According to Goosen planning to apply for a home loan means you need to often assess and adjust your budget to make sure it is realistic. “Review your current financial situation and create a realistic budget that includes potential homeownership costs. Factor in not only the mortgage payment but also property taxes, insurance, maintenance, and other related expenses. You also need to explore all the home loan options available. Research different types of mortgages and lenders to find the most suitable option for your financial situation. Consider seeking pre-approval to better understand your borrowing capacity and strengthen your position during negotiations,” says Goosen.

He says having emergency savings is necessary and needs to be prioritised. “Homeownership comes with unforeseen expenses. Establish or bolster your emergency fund to cover unexpected costs, ensuring that you can comfortably manage your mortgage payments even in challenging circumstances. Also engage with financial advisors to receive personalised guidance based on your unique circumstances. They can help you navigate the complexities of home financing, offering insights into optimal financial strategies,” says Goosen.

Finally, says Goosen, you need to lock in a favourable rate. “If you decide to proceed with a home purchase, consider locking in a favourable interest rate when you secure your mortgage. This can provide stability in a changing economic environment,” says Goosen.

Goosen says by adopting these strategies, prospective homeowners can position themselves to navigate changing interest rates and secure a home loan that aligns with their long-term financial goals. “As the financial landscape evolves, proactive financial management becomes increasingly critical. Careful financial planning today can pave the way for homeownership in the future,” says Goosen.

An article published on Property24 on October 12, 2018, features Mpho Ramatong, FNB Home Finance Division Channel Head: Housing Schemes, who said when lenders assess an application, affordability, which considers your total income relative to living expenses, is an important measure used to determine whether you would be able to keep up with monthly home loan instalments or not.

This can further influence the home loan amount and interest rate you would be quoted for the term of the loan.

“Therefore, taking the time to ensure that your living expenses are declared correctly can go a long way to ensure that you get the best possible bond deal from your bank,” said Ramatong as she unpacked some of the common mistakes that consumers make when completing the expenses portion of a home loan application:

1. Duplication

Some applicants fail to get a good home loan deal due to the duplication of expenses.

For example, if you have declared funds that you prepay into your credit card monthly, which you may be using to fill up for petrol and for groceries, you need not complete the groceries and petrol expenses portion in the form.

Ramatong said another form of duplication may arise if you are co-applying with a partner or individual that you stay with. In this instance, only one applicant may declare shared living expenses. For example, rent, water and electricity costs.

If the expenses are duplicated, lenders may not always be aware that the co-applicants stay together and share some expenses.

2. Dishonesty

Being dishonest about your living expenses may lead to your application being declined.

When applying for a home loan, banks require that you submit a payslip and six months’ worth of bank statements, amongst other documents. As a result, any disparity in the expenses portion of the form can easily be picked up by the bank.

3. Entertainment

Be careful not to mistakenly declare a high entertainment expense by failing to separate needs from wants.

For example, a need could be monthly costs for educational or recreational activities. A want can be anything that you would possibly cut back on in tough times, such as movies or eating out at restaurants, and so forth.


“If you aren’t sure about how to correctly declare expenses, it is advisable to consult your bank or an expert to avoid making costly mistakes,” said Ramatong.


This article was first published on Property24:  Property24