8 August 2016 – Home loan customers are often not aware that some banks may continue to monitor their credit profiles and perform updated affordability checks up until bond registration. This means consumers taking on further debt after they have received a home loan approval may find that the approved home loan amount is reduced, repriced or declined all together.
“We have found that consumers are often unaware that taking out further debt after their home loan is approved will trigger a review on the home loan application,” says Tommy Nel, head of credit at FNB Home Loans. “We continually re-assess loans that we have approved in the window up until the bond registers in the Deeds Office and the property is transfer into the new owner’s name.”
Any new adverse information listed against any of the applicants in this bond registration window, such as missed payments or defaults or further debt taken on, triggers the review process. The reassessment will take into account this new information on the applicant’s credit profiles well as any new debt obligations entered into.
“This can result in repricing of the home loan, a lower amount offered or, in some cases, even a complete decline of previously approved loan,” warns Nel. “This can obviously be a very distressing experience for prospective homeowners; however, the reassessment is necessary to protect the interests of both client and bank.”
The result of overextending credit puts potential home owners at risk of foreclosure, which some consumers never fully recover, as