“There are several things you can do to improve your chances of bond approval,” says Carl Coetzee, CEO of BetterBond. “Having some form of credit is one way of proving that you are able to manage your finances. Banks consider your credit profile when reviewing your bond application. As this includes an evaluation of whether you are able to meet your financial obligations, it is advisable to have some form of debt so that you have a proven payment track record.” However, make sure this debt is based on your needs and what you can afford.

Choose your debt wisely. It’s fine to have some clothing accounts, for example, as long as you make regular payments, says Coetzee. “Try to maintain 'good' debt for essential items, rather than multiple store accounts for items you don’t need. A loan for a car, study or your business would be considered good debt.” A home loan is also considered to be good debt as it requires a long-term investment in a tangible asset.

As with any loan, you need to know what you can afford to pay each month before you apply for a bond, says Coetzee. BetterBond offers a range of online calculators that will help buyers make an informed decision when they start looking at homes. The home loan repayment calculator gives an indication of monthly repayments and total bond and transfer costs depending on the purchase price and prime lending rate. Use the affordability calculator to work out how much you can afford to spend on your home, based on your monthly income and expenses. “You can even work out how much you need to save for a deposit on your home, and this is one of the factors that will count in your favour when applying for a bond.”

As interest rates increase, affordability has become even more important when buying a home. “These online tools make it easier to plan ahead, budget wisely and manage your bond repayments effectively,” says Coetzee. Once you have worked out your price range and how much deposit you need to save, apply online for a pre-approval. The pre-approval process includes a credit check, so you will have a better idea of your credit status before you apply for a bond.

“Not only will a pre-approval make your bond application process smoother, as you would have already submitted all of your documents, but it could significantly improve your chance of bond approval. BetterBond’s data shows that a client who gets a pre-approval with BetterBond has a 95% chance of getting a bond,” says Coetzee.

While a bit of responsible debt may help you secure a bond, be mindful of splurging on expensive items on credit or opening accounts just before you submit your application, cautions Coetzee. Also, spend within your means. If you qualify for a R2 million bond but your household expenses and associated costs would force you to incur more debt to make it through the month, rather consider a home at a more accessible price. “In this way, you can make your home loan - as a form of good debt - work for you in the long run as a sound investment, rather than a financial burden.”