Buying a home can be a stressful process, particularly in a competitive market where you need to move quickly or run the risk of losing out on buying the property of your dreams. Being given an ‘approval in principle’ from a financial institution can play a significant role in moving ahead with the property agreement contract.
Also referred to as a quotation, an approval in principle is an indication of the loan a bank is willing to offer an individual. Once a buyer receives this information from the bank, he or she should let the relevant estate agent and conveyancing attorneys know as this will be a clear indication that the buyer has the ability to obtain the necessary bond and guarantees in order to proceed with the property purchase.
The deciding factors
Determining whether to offer an approval in principle as well as the value for which this will be offered, a financial institution will consider a number of factors. The exact criteria may vary from bank to bank, and therefore it is always advisable for a buyer to talk to the relevant bank directly to ascertain what these criteria are. In broad terms, the bank will be assessing whether the buyer will be able to afford the loan, and the repayments necessary to pay this back as agreed. As such, factors such as the buyer’s income will be taken into account, as well as all other existing financial obligations and credit records.
The steps in securing the loan
In order for the approval in principle to constitute a bond approval, the buyer must accept all the terms of the approval in principle. Once an Agreement of Sale is in place on a property, the bank will perform a valuation and will issue the buyer with a letter of final bond grant. The bank’s bond attorneys will be instructed to proceed with issuing guarantees and registering of a bond in their favour.
Once confirmed, the property sale and transfer process can proceed provided all other conditions relating to the contract of sale are met.
I would like to say a big thank you to the entire team at Snymans Inc for providing such exceptional service with the sale of my property. I would most definitely recommend your company to others.
- Lucy Snyman
Thank you so much to Chloe for all the hard work done and the professional service you give my clients.
- Michele le Roux
Thank you team Snymans, you guys were excellent. Many thanks to Stacey and the whole team involved. Most appreciated!
- Loretta & Brian
We would like to express our heartfelt appreciation of the welcoming, excellent and professional service we have received from your whole team. We definitely know where to turn for our future business and transfers.