# Regulatory Compliance Category > National Credit Act Forum >  Home loan approval may take longer

## duncan drennan

It seems that the home loan approval process may take longer due to the upcoming NCA. Seems to make sense as the bank will need to ensure they don't lend "irresponsibly". You might find that nothing will really change until someone takes them to court and they lose a whole lot of money - then credit checking will get _nasty_.




> Berry Everitt, Chas Everitt MD said the new legislation would mean that house buyers would have to wait more than two months for their mortgage bond application to be processed.
> 
> Already, banks and other lenders are starting to implement the provision of checking a borrower's total indebtedness before granting their loan, maintained Everitt.
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> "To do this, they have to source information about all and any of the borrower's current personal loans, vehicle finance agreements, higher purchase agreements, store cards and micro loans, as well as existing home loans, from each and every other lender involved."
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> Everitt added that there is currently no consolidated database that prospective lenders can go to for this information so it will take much longer for banks to approve home loans.
> 
> Bond originators, however, say that house buyers won't have to wait as long as Everitt suggests for their applications to be processed.. They explained that, currently, it takes around five to seven working days for final approval of a home loan.
> ...

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## Dave A

Tougher access to credit could have some serious downstream consequences. For example, if the new measures make home finance less accessible, it will reduce qualifying buyers, which will shift the supply/demand relationship.

The total debt analysis could prove interesting. I wonder what kind of total liability/nett worth ratio will be the watershed for a bond approval?

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## duncan drennan

> The total debt analysis could prove interesting. I wonder what kind of total liability/nett worth ratio will be the watershed for a bond approval?


Definitely going to be interesting - the whole yardstick has changed. How much more will this affect small business owners? Previously it would be easy to just produce salary slips - does this mean that large investigations will have to be done wrt the goings on of your business? Will the debt for which you are personally liable play a role (i.e. sureties)?

Just thoughts that spring to mind.

This just popped to mind - is there some level at which the act no longer applies? Kind of like the salary levels at which the BCEA can be adjusted by a contact.

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## Dave A

> This just popped to mind - is there some level at which the act no longer applies? Kind of like the salary levels at which the BCEA can be adjusted by a contact.


As I recall, most of the provisions of the Act fall away if the debtor has assets in excess of R1 million, or annual turnover in excess of R1 million.

I remember at the time thinking it was interesting that the Act only referenced asset value, not *nett* asset (or nett worth).

I suspect the category which is going to feel the pain is the first time home buyer. Although in saying that, even if one already has assets in excess of R1 million, there isn't anything stopping banks from gathering all the other info anyway  :Roll Eyes (Sarcastic):

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## amandaaz

How can you get a loan for college with bad credit and no cosigner?
My sister is ready to go to college and they added extra expenses and she has very little time (like 2 weeks) to get her money and she has no co-signer to get a loan and her financial aid is used up. She's applied for scholarships and got all she can get there too. What else can she do?

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## garthu

> does this mean that large investigations will have to be done wrt the goings on of your business? Will the debt for which you are personally liable play a role (i.e. sureties)?


If you are now the business owner/self employed, the new procedure is check into both your business and personal ability to service the loan, regardless of the app being personal or in business name. They want full audited reports up to date, six month bank statements of all accounts etc




> As I recall, most of the provisions of the Act fall away if the debtor has assets in excess of R1 million, or annual turnover in excess of R1 million.


Cant comment if that is correct or not, what i can say is that i have seen people turned away (investors) which are worth millions. They are based purely on the fact that they are not able to prove actual income. There rental units pay cash etc, then they are stuck - the fact they are worth 5 million Rand is meaningless now. Income/debt ratio is what counts. The investors show min "profit" or nett for tax purposes - it now bites back

We had an interesting discussion last week that was on same lines. We think it;s a matter of time before some astute investor takes advantage of the system and ends up with a "free" property based on the way the law is structered at the moment. Although unlikely and not that easy, it is feasible

On a final note, and still maintain this, there is no consistancy in what the banks are doing anyway at the moment although with the systems there should be (our one loan submitted 5 times, rejected with no counter offer, the 5th time, with no changes, full bond - WTF?) At the end of the day, if the guy in credit has a bubulous, sorry for you...

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## garthu

Must say really getting to point where i question the sustainability of business in this field anyway. Just had another loan rejected on the basis that the cellc account and foschini account, although not handed over etc etc, have not been TIMEOUSLY or consistently paid for the last 7 months. The new credit checks show up to 2 years of payments on your accounts. If there is late payments, it reflects - If you are expecting a loan over the next 2 years, INSURE that all your accounts are very timeously paid!

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Dave A (14-Apr-09)

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