Most of us don’t have the money on hand to buy a home outright, so when you buy your first home, you’re probably going to need a home loan. Getting a home loan approved is the final step in the process of making your home-owning dream come true.

The first step is deciding when the time is right for you to buy a home. It’s an attractive idea to be paying off a valuable asset that can create generational wealth for your family, rather than paying rent to someone else every month. However, you need to be financially stable and earning a regular monthly income before you take on a long-term commitment like a home loan.

When you reach that point, and you start browsing property websites to see what homes in your price range are for sale in areas you like, there are some other steps to take care of before you make appointments to view them.

1. Save for a deposit

A deposit will bring down the monthly loan payment and also help you secure the property before your home loan is approved. The larger the deposit, the lower your monthly payment will be, and you may even get a better interest rate. You can still apply for a home loan if you don’t have a deposit, but if you make saving for a deposit one of your short-term savings goals now, it will save you money and make your home-buying journey easier when you’re ready to go house-hunting.

2. Check your credit report

Make sure that your credit report is in good standing. If your credit score is bad, your chances of getting a home loan are slim. Your credit report will show you where you need to make changes in the way you manage debt before you can apply for a home loan or get preapproval. As a Nedbank client, you can check your credit score for free on the Nedbank Money app whenever you like.

3. Pay off existing debt first

Your credit report will show you whether having too much debt is what is affecting your credit score negatively. If that’s the case, start paying off as much of this debt as possible before you look for a house to buy. Improving your credit score can increase your chances of getting approved for a home loan or qualifying for a larger amount.

4. Check affordability

You will be granted a home loan only if you can afford it. Can you manage your monthly payments as well as the bond and transfer costs and any other expenses of home ownership? As a first-time homebuyer, you could get a home loan of up to 109% of the property value to help you pay bond and transfer costs. Use our calculators to work out your bond repayments or bond and transfer costs.

5. Get preapproval

Preapproval tells you what size home loan the lender will grant you in theory, based on your current financial situation. Final approval, however, depends on certain conditions being met when you apply for the loan, including affordability and the value of the property.

Preapproval is helpful when you go house-hunting, because it allows you to set a budget and find a home within your price range. Try our preapproval process to see how much you would qualify for. Nedbank will give you a preapproval certificate confirming that you qualify for the home loan.

Once you have completed these steps, you’ll be ready to go and view a selection of properties and decide on the one you want to make your dream home. Signing an offer to purchase, and having the seller accept it, will be the final step before you apply for your home loan.

Use our Home-buying Toolkit on the Money app to kick-start your home-buying journey with us – it allows you to search for properties, get free property reports, check affordability, get preapproval and finally, apply for a loan.

Get up to R20,000 cash back on the value of your home loan when you apply online, on the Money app or through our contact centre.