So you have found your dream home and you are fed up when it comes to paying someone else’ bond. You also want to get your foot into the property market and so you have decided that it’s time to apply for a bond.
Here’s what lenders look at when you apply for a bond:
- Your credit score
- Your affordability
- And your payment history
Let’s start with your credit score. To apply for a bond, lenders will typically require that you have a score around 650+. Let’s take a look at what this means to you by referencing MyCreditStatus’ credit score.
As you can see, you will need an average credit score at least to be considered for a bond. Anything above that is obviously even better. However, anything below that will reduce your chances. It’s important to remember that the higher your credit score, the better interest rate you will be getting from the banks. So it’s essential that you aim for a high credit score.
Next, let’s discuss affordability. The law, set out by the National Credit Act states that lenders can only approve a bond if they can afford it. They will look at your income and your expenses and if they see that you can afford the repayment then it counts in your favor. Even if you have a great credit score, you won’t get a bond if you can not afford the loan. It makes absolute sense though – imagine you get a bond and your monthly repayment is R20,000 but after taking into account your expenses, it’s clear that you can only afford to pay R10,000. This will result in your default on your repayments and worst of all – losing your new house due to foreclosure.
Lastly, a lender looks at your payment history. If your credit report shows them that you are able to repay your loans, then it will also count in your favor. This will show the banks that you are a responsible lender and that you can commit to paying your loans.
So let’s recap:
- To get a bond you generally need a minimum of 650 points
- You need to be able to afford your new bond
- Your credit report should indicate that you have a good history of repaying your accounts
If you want to see if you meet these requirements, get your credit report from MyCreditStatus today. On our full reports, you will see your credit score, the likelihood of qualifying for a bond, you will see your current loans and affordability and you will see your history with lenders.
This credit report is what lenders will look at so make sure that your credit profile is up to standard to avoid facing disappointment when applying for your bond.