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The Completion of Mortgage Loan Application Forms
By arlene | March 15, 2008
A full understanding of the reasons why such varied items of information are required by financial institutions (banks) on mortgage loan application forms will make the completion of these essential documents easier and less time-consuming. At the same time, the processing of applications will not be needlessly delayed by the institutions having to call for missing data.
The granting of mortgage loans hinges on certain criteria laid down by each financial institution with a view to ensuring that its investment in the loan is properly secured. In order to determine whether or not a mortgage loan application meets with these criteria, banks require certain information which, in the case of loan application forms, falls in one of three categories:
- information regarding the property;
- information regarding the applicant, and
- general information that applies to both the applicant and the property which is required to assess the moral risk as well as the ability of the applicant to repay the loan.
Let us now examine each of these categories in more detail as well as the reasons for requiring the relevant information.
Property
Erf number and portion
It is essential to identify the property for valuation purposes and to accurately describe it in documentation. The erf number, for example, must be correctly described. 164/1, for instance, is probably “Portion 1 of Erf 164″ and should be written as such. Similarly, 123/R is probably “Remaining Extent of Erf 123″ and should be so described in the application form.
Street number and name
These details are used by valuers to ensure that they have located the correct property for valuation.
The size of the property
The legal description of the erf includes the extent of the erf which, when correctly entered in an application form, assists the valuer to confirm the identity of the property.
Name of sectional title development
The correct description of a sectional title complex and its full registered name and sectional title number cannot be over-emphasized. Some application forms also require information about the number of the Certificate of Registered Title and the date thereof. Note that the number on the door or wall may not be the same as the registered unit number. Get it right!
Sectional title plans
The Bank will call for the approved sectional title plan if it has not yet valued a unit in the particular sectional title complex.
Date of purchase and purchase price
Banks generally base the maximum loan they are prepared to grant, inter alia, on the valuation or purchase price of the property, whichever is the lesser. If the property was, however, purchased a considerable time before the loan application is made, the purchase price may no longer bear any relationship to the value of the property and therefore may not be a factor in considering the loan amount.
Building plans and tender
These, where applicable, must be supplied at the time the mortgage loan application is made. The bank cannot determine a valuation without the plans. The tender is required to ensure that the amount is realistic and that the builder is acceptable to the bank.
Applicant
Full names
It is important that the full names of the client are supplied so that the applicant can be positively identified. In the case of a company or close corporation, the full name and the registration number, as well as the names of all its directors or members, must be supplied.
Date of birth and identity number
The legal description of the applicant includes his, or her, date of birth and identity number or its registration number in the case of a company or close corporation.
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