Buying a house is an expensive affair. With property costs rising year on year, home loans offer a handy option for quick access to cash to support home purchases. But, such loans also come with stringent creditworthiness requirements, and banks charge a huge interest on loan repayments. Fortunately, there are some ways and tips to find home loan providers that offer affordable interest rates and flexible credit requirements, helping first-time home buyers.

Buying a house using home loans without a credit check
Most home loans come with credit checks in which lenders verify multiple documents of loan seekers to assess their records related to loan repayments. If an applicant failed in the past to repay loan installments or has credit inquiries on their record, then their credit score dips, and they are unlikely to get loans approved. For people wondering, “Can you get a home loan without a credit score?” or “How can I buy a house without a credit check ?” There are solutions.

1. Secured loans
This option involves borrowers having to provide an asset as collateral to get a loan from the lender. The asset could be anything from a vehicle to another piece of property. Lenders attach assets to secured loans to seize and control possession if the borrower cannot repay the loan. Financial institutions that offer secured loans often forego credit checks. Instead, they rely on the asset’s value to minimize their credit risk.

2. Payday loans
These are small and short-term unsecured loans that will need to be repaid by borrowers when they get their next paycheck. Payday loans offer immediate cash for home purchase purposes. As these loans are easy to obtain and repay, lenders do not ask borrowers to show their credit history-related documents. All one must show are documents proving they earn a regular income.

3. Peer-to-peer lending
One can borrow from individual investors instead of banks and non-banking financial institutions in this kind of loan. Peer-to-peer lending, commonly known as P2P lending, can also be availed of through digital platforms. On these platforms, a person’s credit score is not as influential as other aspects, such as their personal story or reasons for borrowing money. Due to that, these kinds of loans are easy to procure. But, if there is a downside to these kinds of loans, it is that they come with high interest rates. So, repayment is a challenge for many borrowers.

4. Loans from non-traditional lenders
Some institutions offer home loans to applicants without credit checks. These non-traditional lenders evaluate factors other than a person’s credit score before approving loans. Some such factors include yearly income, personal references, employment history, and financial position to repay the money borrowed. Similar to P2P lending, these loans also tend to have high interest rates.

5. Microloans
Not everybody who wants to purchase a home using home loans can access traditional banking services. Many people in the country live in zones without banks, financial institutions, and other renowned and credible moneylenders. For such individuals, the idea of microloans is attractive. These loans are offered by microfinance institutions. Apart from offering immediate cash to borrowers, these loans come without strict (or any) credit score requirements.

Tips for first-time homebuyers
Because of the soaring property rates, many people find it difficult to spend thousands of South African rands to purchase a home. This is why many people looking to purchase homes are likely to be first-time home buyers. First-time home buyer loans are available for such individuals. With some easy tips, buyers can further simplify the process.

1. Do not settle for the first rate
First-time home buyers must explore all their options before applying for a home loan. People who are relatively secure financially and can get a home loan need to apply through various banks and other financial options to choose a home loan with the best possible interest rate. Individuals can work with reputed home loan comparison services to compare multiple loan providers.

2. Choose wisely between variable and fixed interest rates
People who qualify for home loans often get two main options: a loan with a fixed rate or a variable rate. Fixed-rate loans have a standard rate of interest throughout the tenure of the loan. The cost of borrowing money does not change with the market. Due to this, people who take these loans can budget accurately for monthly repayments without any issues. The downside to fixed-rate interest home loans is that the interest amount does not reduce even if the overall market-based interest rate is low.

In contrast, variable-rate home loans adjust over time in response to market changes. Generally, variable rates are lower than fixed rates. The main advantage of these loans is that their duration is short. Unlike fixed-interest rate loans, these loans do not continue until the duration expires.

3. Find the right home loan provider
When looking for banks that offer the best interest rates on home loans, it is important to know that the rates keep changing based on market trends, the bank’s performance, and several other factors. Most financial institutions tend to have an 11% interest rate, but some banks charge around 9% interest. These rates are subject to change. This is why it is useful to explore and compare interest rates and terms offered by various financial institutions to find the best home loan provider based on one’s needs.