SA Homeloans: Ever wondered why some banks approve applications while other banks decline them? Why some banks give 100% bonds while others only give 85 – 90%?
The answer is quite involved, but I’ll try to explain. Regarding some approving and some not all depends on your personal credit profile as well as your internal bank rating and their internal rating system called the bank scorecard.
Your credit profile needs to be clear for a bank to approve your loan, and in addition to that you need to have a high enough credit score for them to approve. Most banks require a credit score of 600+, so if you fail that first hurdle you might be declined.
Your internal record at the bank involves accounts you may have with that bank and how you have conducted those accounts.
The bank scorecard is an algorithm used by the bank combining all of the above factors and includes other “secret” criteria that the bank requires.
The banks scorecard is secret because thats what gives one bank an edge over another so they never disclose what the elements of the scorecard are – so next time you get a blank answer stating that you don’ t meet the bank’s minimum criteria, you know why.
Second point is that some banks give 100% loans and others not.
It really does depend where you bank. Your own bank will always consider 100% but may give a lower offer, but here’s a quick snapshot of how it’s worked out – remember, the % is always a percentage of the purchase price and not the value, except when it comes to a further bond or 2nd bond then it’s worked out on the value
These figures are based on a purchase price/further bond of under R1.5mil:
So I hope that clears up some confusing points regarding home loans in general, if you have anything further you are welcome to email us or call us any time.
* information correct as per time of posting