Getting a Home Loan in South Africa with Bad Debt

Conventional wisdom says that a bad credit rating will scupper any chance you may have of getting a home loan.

However, thanks to the more competitive nature of the industry in these latter days, it is indeed possible for you to get a home loan, no matter your current debt status.

Make no mistake, getting a loan while your credit score is bad is harder, but with some work it’s still doable.

Assessing the damage

If you find that you have a poor debt record, the first thing you need to do is find out why, and how bad things are.

If you’ve been blacklisted, for instance, your chances are very poor indeed. In this case, you’ll probably need to undergo some form of debt counselling in order to improve your score.

However, if you’re not blacklisted, you can still secure a home loan — you may simply find that you’ll be obliged to pay more than you would otherwise.

Patching the damage

The other option, of course, is to hold off on your home loan. A large part of the problem, for instance, is related not to non-payment of debt, but rather to late payment.

In this situation, a little discipline goes a long way. Focus on paying on-time, and maintain this practice for at least a year. Doing so will make for a far greater prospect of success when you apply for a home loan.

Indeed, regardless of whether you can get a home loan with a poor debt score, the truth is you probably shouldn’t. It would be far more financially prudent in this case to spend a year or two working on improving your debt score.

The benefits of doing so are clear: lower monthly payments, higher loan amounts, and a greater likelihood of success. Really, it’s a no-brainer.