Getting a home loan is one of the most important steps to becoming a property owner. But how does the bond application process work and how long does it take banks to approve a home loan in South Africa? We’re glad you asked! Firstly, it’s important to note that the amount of time it will take for approval can vary from person to person and bank to bank. This is because a home loan application’s success will depend on several different factors that impact both the bank and yourself. For example, your credit record and even the size of your deposit could affect how much you can afford. However, there are some average waiting times that you can loosely plan around.

“Ideally, it should take a minimum of one week to get complete approval; however, due to application backlogs, delays or customers not meeting certain requirements, the process can be delayed for at least two to four weeks at most.” Stanley Mabulu, Channel Management Head at FNB Home Loans (quoted from Businesstech online report).

When you buy property for the first time and apply for a home loan, you may find yourself worried about the process. The good news is that understanding what you need to do and what you can expect can take a lot of the stress out of the process. After all, you should enjoy your journey of buying your first property as much as possible. These are exciting times! Best of all, with the tips we're about to share, you'll be able to start the process with confidence!

Step 1: Get Pre-Qualified

Take a good look at your finances to see if you can comfortably afford a home loan on top of your current expenses. Once you’re feeling confident, it’s always advised that you also get yourself pre-qualified. This way you can avoid finding the house of your dreams and then having it be way out of your home loan budget. Getting pre-qualified gives you a pretty good indication of how successful you’ll be with the banks.

Step 2: Find Your Property

You need to have a property in mind when you apply for a home loan before the bank can assist. Speak to one of our leading estate agents and look at properties for sale in your desired locations. Once you find the home and your offer has been accepted, you can then apply for a home loan. Top tip: before making any offers, if you find options you like online, always make an appointment for a real-life viewing. Pay close attention to the size, features and condition of the property and, before signing the legally binding OTP, be sure to read all accompanying documentation carefully.

Step 3: Sign Offer to Purchase

Once you’ve found the property you’d like to buy, you and the seller will sign the offer to purchase. It should stipulate the conditions to be met by both parties. The Offer to Purchase should make allowance for you to obtain your necessary funding. It should also include a 72-hour clause whereby the seller can still market the property while your offer is still pending financial backing, but if they get a better offer, then they need to provide you with 72-hours’ notice to secure funding and avoid losing out on the home. That’s why it’s vital to submit your home loan application the moment you have the signed Offer to Purchase. This way you’ll hopefully get the funds to back your offer as quickly as possible so the deal can be finalised.

Step 4: Submit Home Loan Paperwork

Now that you know what you can afford and have signed your offer to purchase, you will need a few documents to get your home loan application submitted to various banks. To simplify this process, we recommend getting a bond originator like BetterBond to do this all for you. Use this checklist to make sure you have everything you need to be locked and loaded:

• Offer to Purchase
• SA Identity Document
• Latest Payslip
• 6 Months Consecutive Payslips (if commission/overtime is earned)
• Latest 3 Months Bank Statements

Step 5: Patience, Patience & More Patience

This can be the most worrying part: waiting to hear back from the banks. As mentioned, this could be anywhere from 1-4 weeks from the submission of all the documentation. While this can turn into a lengthy process, it’s important that you don’t despair if the weeks start rolling by. There are a number of factors that play a role in your assessment, and ultimately getting you approved, namely:

• Your credit score
• The size of your deposit
• The value of the property

Step 6: Last Legalities & You’re Done

Congratulations! Once your home loan has been approved, you will be well on your way to becoming a property owner. There are just a few closing legalities to take care of now. You’ll need to put the house and utilities in your name, as well as pay the transfer costs. Speak to your property professional and financing consultant about what is or isn’t covered in the loan, so that you know exactly what transfer fees you’ll need to settle in order to register the property in your name and have that reflected on the title deed. These legal fees and gathering of signatures can take up to 3 months, but rest assured because at this point, your home has been purchased and funded and the deal can no longer fall through.

Why Can Banks Take Even Longer to Approve a Home Loan?

Sometimes, when applying for a home loan, it is really important to be meticulous and triple-check that you have provided the bank with all the correct information required. Most of the home loan approval delays are because banks are having to contact applicants to get accurate or missing data or documents. This is why working with a real estate professional who knows every inch of this process can really take away some of the stress. Reach out to one of our property professionals and let’s start exploring what home loan options and properties are a good fit for you.