Discover your real property buying power

There are few things more disappointing than making an offer to buy the home of your dreams and then being turned down for the home loan that you need to finance your purchase.

"This may be because you don't earn enough to qualify, or don't have enough disposable income, or perhaps because your credit record is not what you thought, but whatever the reason, you can avoid the distress and embarrassment of this situation by getting pre-qualified for a bond before you start even looking at homes for sale," says Gerhard Kotzé, MD of the RealNet national estate agency group.

The easiest way to obtain pre-qualification is through a reputable mortgage originator, and it is a completely free and quick process, he notes. "This will not put you under any obligation to actually apply for a home loan, but it will provide a convenient tool to aid your home buying and financial planning process.

"You will need to provide your ID and payslip copies (or alternative proof of income if you are self-employed, and will also need to agree to a credit check. If everything is in order, you will be issued with a pre-qualification certificate, valid for three months, which states the loan amount for which you qualify based on your gross income, at the current prime rate.

"This will be your best indication of your real buying power in the market - and help you to save time and money by only viewing homes that you know you can afford."

It will also, says Kotzé, help you to focus on the features of each home you do view, to see if it really meets your needs and preferences and decide if it offers the best value for your money.

"Another advantage of pre-qualification is that it makes home sellers feel more secure about accepting your offer to purchase. Most of these agreements contain a contingency clause that provides for the sale to be cancelled if the buyer cannot obtain the required home loan within a certain period, and sellers know there is a much smaller risk of that happening if their prospective buyer already has home loan pre-qualification."

In addition, he says, obtaining loan pre-qualification will put you in a stronger negotiating position with lenders when it comes to getting the most favourable interest rate on your actual loan - and potentially saving many thousands of rands on the total cost of your home over 20 or 30 years.

"The reason for this is that once you have been pre-qualified, banks know that you are a low-risk borrower with a good credit record and a stable employment and financial situation, who can comfortably afford the monthly repayments on a certain loan amount and who is also unlikely to default."