The approval of a Home Loan definitely comes with a priceless feeling of relief and security on the part of the consumer. For most, it will be a journey ending in tears of joy following tears of pain caused by numerous application rejections brought on by stringent criteria from financial institutions.
What then remains is for the consumer to honour the obligations towards the bank for the repayment for the debt as according to the agreed terms.
In anticipation of applying for a Home Loan many consumers are indeed aware that a healthy credit profile and debt history is critical in this quest, and so they adopt measures to spruce up their credit profiles in order to be attractive.
Unfortunately this has been abused in some instances whereby desperate measures bordering on fraud are done to present a healthy credit profile to financial institutions in pursuit of a home loan approval. Consequently this has been met by financial institutions in turn, by having measures in place to eradicate risks coupled with such conduct.
Many consumers will be surprised to find out that lenders keep a track on approved home loan applications, knowing that consumers with approved home loans, let down their guard in relief and resort to their true credit behaviour. As a practical example, a consumer may refrain from multiple borrowing to maintain a good credit profile in anticipation for a home loan application. However, upon such home loan application being approved the consumer then resorts to multiple borrowing. This is done in belief that the lender only assesses the application and financial standing as per the evidence that is presented at the time of application only.
Owing to the risks presented by the above scenario, some financial institutions conduct reviews on approved applications to ascertain if the favourable financial circumstances which were presented and approved at the time of the home loan application are still persisting. This is important in so many ways but central to that is that it enables the lender to make a correct forecast and assessment on that credit facility, as it affects debt repayment in future.
Phoenix Group therefore advises consumers whose applications have been approved not to incur further debt or default on existing debt, as this might trigger a review assessment on the very same application that was approved prior in light of the new developments. A review may cause the lender to insist on new repayment terms, interest rate, amount approved or even reject the application in the most extreme of cases. In the joy of celebrating a new bond approval such is definitely not good news and should be avoided at all costs.
FNB Home Loans advised that it continuously reassesses approved home loans in view of any relevant new developments on the credit profile of the consumer. As alluded to above it is done to protect the security of their investment in the credit facility granted to the consumer.
Phoenix Group advises consumers to avoid any negative new developments on their credit profiles at least until after the bond has been registered with the Deeds Office. However, we encourage responsible borrowing and only should it be of utmost and critical necessity may one incur further debt.
We are focused on securing the best deal on your next Home Loan while committing to providing the most memorable service in this respect. We specialise in bond origination and bridge financing amongst other areas of speciality.
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The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter. One should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. The contents of this site contain general information and may not reflect current legal developments or address one’s peculiar situation. We disclaim all liability for actions one may take or fail to take based on any content on this site.
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