Astute property buyers in South Africa are increasingly seeking pre-approval for their home loans as the first step in the purchasing process. Paul Stevens, chief executive officer of Just Property, explains the reason for this trend: “Not only does pre-approval help each buyer understand their budget, but it also makes their offer more attractive to sellers.” Let’s find out more.
Many first-time buyers enter the market with misconceptions about their purchasing power or the loan conditions they may receive, overestimating how much they can borrow and forgetting to factor in additional expenses such as insurance, property taxes and maintenance.
Some assume that a high income alone will qualify them, overlooking factors such as credit history, existing debt obligations, and fluctuating interest rates. Others believe they will automatically secure the best interest rates from banks while in fact lending institutions tailor rates to each applicant’s credit profile and risk factors, and each differs in how they calculate rates, fees and repayment flexibility.
Pre-approval dispels these misunderstandings by giving buyers a realistic view of their finances. Although it does not guarantee a loan, it helps buyers gauge the potential interest rates they may secure, how repayments will be affected, and the likelihood of final bond approval.
“And with pre-approval, agents and buyers are on the same page with regard to price range,” adds Piet Burger, manager at Just Property George.
This benefits sellers too: buyers who know their limits avoid wasting their own and everyone else’s time, and sellers gain confidence in receiving viable offers. “The timing of a sale is everything to the seller,” says Burger, emphasising how critical it is to reduce the back-and-forth over finances once an offer to purchase is made.
“If a seller receives more than one offer to purchase (OTP) on his property, the OTP from a pre-approved buyer will definitely be successful, all other factors being equal,” Burger confirms.
Why pre-approval matters
According to Stevens, widespread adoption of pre-approval has replaced the once-exploratory approach to house hunting with a more financially informed strategy – the reason being that “pre-approval simplifies the entire buying process, giving you peace of mind and positioning you as a serious buyer in the eyes of the seller”.
Carl Coetzee, chief executive officer of BetterBond, highlights three specific benefits:
Understanding your budget: Buyers get a clear, realistic price range so they won’t risk falling in love with a home they ultimately cannot afford. This saves time and stress.Strengthening negotiating power: Sellers take pre-approved buyers more seriously, often prioritising these offers. In competitive situations, having a lender’s backing can be the key to securing a property.Building confidence: Buyers who know what they can afford feel more in control and make quicker, more assured decisions. Pre-approval minimises financial guesswork, reducing anxiety and uncertainty.Bradd Bendall, BetterBond’s national head of Sales, adds: “Pre-approval positions buyers as credible, serious contenders in the eyes of sellers and lenders. It gives buyers a psychological edge and allows them to focus only on properties that fall within their price range. This clarity and focus result in quicker, more confident decisions.”
Clarifying the pre-approval process: Securing pre-approval typically involves gathering proof of income (payslips or financial statements), ID documents and recent bank statements. A bond originator like BetterBond will arrange a credit check, then assess affordability based on the provided documentation.“Once all the paperwork is submitted, pre-approval can often be completed within days, depending on the complexity of the information,” says Coetzee.
Incomplete documents or credit report issues are the most common challenges, but it’s far better to address these before signing an offer to purchase. “If there is an issue with the credit record, lenders might request additional information or require prospective buyers to address those concerns,” Coetzee adds.
Bendall notes another important distinction: “There’s a big difference between a quick affordability check and a formal pre-approval. The former gives you a ballpark figure, but it’s almost always lower than what you might actually qualify for. With pre-approval, you’re working with verified numbers – and you have the paperwork to back it up.”
He adds that pre-approval also lays the groundwork for a simpler bond application down the line. “Once a buyer has been pre-approved and then signs an OTP, we already have all the necessary documents. That makes the full bond application process much faster and more efficient.”
Once buyers have their pre-approval certificate – usually valid for 60 to 90 days – buyers can search for properties, confident that their finances have already passed initial checks.
Shaping buyer behaviour
Rather than heading straight to show houses, many purchasers now prioritise securing pre-approval to clarify their budgets and strengthen their bargaining power. BetterBond data shows that 95% of clients who get pre-approved achieve bond approval, underscoring the process’s value. Sellers also welcome pre-approved buyers, as the risk of financing complications is significantly lower.
“Our top agents only work with pre-approved buyers because they know this ensures a smoother process for everyone involved,” Burger explains. In competitive or fast-moving markets, such readiness can mean the difference between winning and losing a property. Moreover, pre-approval bolsters the buyer’s negotiation power. Knowing exactly what they can spend allows them to act decisively – whether that’s matching or beating a competing offer.
Interest rates and lending criteria can shift quickly, so buyers are advised to monitor the market and renew their pre-approval if their house-hunting extends beyond the validity period. Even a small rate increase can impact monthly repayments or overall loan eligibility. A new job, additional debt or changes to one’s financial circumstances may also affect eligibility – updating these details helps avoid unpleasant surprises when an offer is on the table.
A smoother path to homeownership
Pre-approval is a game-changer for both buyers and sellers. It empowers buyers to focus on properties within their means, negotiate assertively and act decisively. For sellers, the knowledge that a buyer has already cleared initial financing hurdles minimises the risk of the deal collapsing at the eleventh hour.
By eliminating guesswork, pre-approval fosters transparency, paves the way for a quicker, more secure transaction, and helps buyers minimise stress and avoid disappointment.
“Today, buyers can even apply for pre-approval online – any time, day or night,” says Bendall. “We guide them through the process, so it’s never overwhelming. It’s never been easier to get started.”
