The act, launched on 1 June, is meant to protect consumers from delving too deeply into debt, and therefore ensures that your financial position is property scrutinised before a bank or credit lender is allowed to offer you credit.

But despite the tough process you now need to endure before you’re being afforded credit, initial indications are that most people are still qualifying without problems for home loans, says Saul Geffen, chief executive of bond originator MortgageSA.

Don't disqualify yourself

He advises you to continue to apply for homes loans as normal and not ‘disqualify’ yourself by not even applying.

“(W)hat we have seen so far is that people that have a sound financial position are getting home finance with no trouble.

"The level of declines has increased marginally, but the real effect is the slightly longer process as it requires a little more supporting documentation.”

Apply as normal

Consumers will benefit from the National Credit Act (NCA) because they’ll be protected against reckless lending and over indebtedness. Maximum levels will now be set for interest rates, fees and charges levied by lenders, he says.

“And the establishment of legislative bodies like the National Credit Regulator (regulates the industry and enforces compliance) and the National Consumer Tribunal (conduct hearings and issue fines) will give consumers a greater sense of confidence that they are represented and have avenues of recourse.”

But in the meantime, he says, there’s no need not to apply for your home loan as per normal.

Existing debt

“It’s now more important for buyers to get pre-qualified to find out if they qualify for home finance and how for much. This will give them certainty in knowing what they can afford and give sellers a greater deal of confidence in accepting an offer.”

As part of the new law, banks require all information that pertains to your existing debt, so as to better understand what you can afford.

From your side, this means that you need to give full disclosure of your debt exposure and monthly expenditure, including a comprehensive submission of current monthly budgets including all existing debt via your retail accounts.

Prior to the NCA

“Certain homebuyers who are able to prove higher disposable income will be in a better position when applying for a home loan than if they had applied on the gross income basis, the main criterion used before the NCA.

However, if you’re finding that you have less disposable income, you’ll also more likely not qualify for the level of funding that you were looking for.

Geffen says that it won’t be harder to become indebted, rather it will be harder to get into a position of over indebtedness, as lenders will be penalised for reckless lending.