Loan terminology explained
A Loan to Value Ratio means that your home loan amount is equal to the value of your property. There are instances where a bank will advance you a loan of more than 100% of the value of the property, for example 108%, so that transfer duties and the like are covered by your loan. It’s actually pretty straightforward.
A Readvance is when a portion of your home loan is repaid and you can borrow all or part of the repaid amount again. You don’t have to register another bond. Your property and financial stability will be re-assessed. A readvance comes in handy when you wish to renovate or improve your home. What you will have to provide the financial institution with in order to apply for a readvance: proof of permanent income, a quotation of the proposed renovations, or if applicable, approved building plans.
Preparing for a home loan – how to protect your credit
When deciding to apply for a home loan, there are a few things you should take into consideration before approaching the bank or lender. Especially with the new National Credit Act, you should prepare your credit status so that you can fit the profile of a homeowner.
Banks no longer only look at your salary when you apply for a home loan. They look at the whole package. They look at what you earn, what you spend, which deductions are being made, and most of all, your credit report. They look at your monthly expenditure such as home loans, retail store accounts, medical aid expenses, travel expenses and insurance.