Consumers who fail to correctly declare expenses when completing a home loan application may limit their chances of getting the best home loan deal possible.
Mpho Ramatong, FNB Home Finance Division Channel Head: Housing Schemes, says when lenders assess an application, affordability is an important measure used to determine whether you would be able to keep up with monthly home loan instalments or not.
She unpacks some of the common mistakes that consumers make when completing the expenses portion of a home loan application:
Duplication Some applicants fail to get a good home loan deal due to the duplication of expenses. For example, if you have declared funds that you prepay into your credit card monthly, which you may be using for petrol and for groceries, you need not complete the groceries and petrol expenses portion in the form. Ramatong says another form of duplication may arise if you are co-applying with a partner or individual that you stay with.
Dishonesty Being dishonest about your living expenses may lead to your application being declined. When applying for a home loan, banks require that you submit your payslips and six months’ worth of bank statements, amongst other documents. As a result, any disparity in the expenses portion of the form can easily be picked up by the bank.
Entertainment Be careful not to mistakenly declare a high entertainment expense by failing to separate needs from wants. For example, a need could be monthly costs for educational or recreational activities. A want can be anything that you would possibly cut back on in tough times, such as movies or eating out at restaurants, and so forth.
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