When you apply for a home loan, your bank is legally required to provide you with a quotation that lays out all the important details of your loan. This isn’t just about your interest rate - there’s a lot more that needs to be communicated so that you can make an informed decision.

Understanding what must be included in your quotation helps you compare offers fairly and avoid hidden surprises down the line.

The Legal Framework

South African home loan quotations are governed by the National Credit Act (NCA). The NCA was introduced to make the credit industry more transparent, protect consumers, and ensure that lenders provide clear, upfront information about the cost of credit.

This means that every bank, by law, must disclose certain information in your quotation.

What You’ll See in a Home Loan Quotation

1. Interest Rate

This is usually the first number buyers focus on, but it’s not the only factor. The quotation must state whether your rate is:

• Linked to Prime (variable and moves with the SARB repo rate), or
• Fixed for a certain period.

2. Loan Term

The bank must confirm the repayment period - typically 20 years in South Africa, but shorter or longer terms may be available.

3. Monthly Instalment

The quotation must clearly show your expected monthly repayment based on the rate and term.

4. Initiation Fees

These are once-off admin costs charged by the bank to set up your loan. The NCA caps these fees, and the quotation must specify the amount.

5. Service Fees

Banks are also allowed to charge a small monthly service fee for managing your bond account. Again, the NCA sets maximum limits, and the fee must be disclosed upfront.

6. Credit Life Insurance

While not always compulsory, some banks may require you to take out life insurance to cover your bond in the event of death, disability, or retrenchment. If it’s included, the premium must be disclosed.

7. Total Cost of Credit

This is the big one. The NCA requires the bank to show you the total cost of the loan over the full term. This includes all interest, fees, and charges. It’s the best way to compare two different loan offers fairly.

8. Early Termination or Settlement Clauses

Your quotation should also explain whether there are penalties for paying off your loan early or switching to another bank.

Why This Matters

It’s easy to get distracted by a single number - the interest rate - and assume that’s the full picture. But small differences in fees, service costs, and insurance premiums can add up to tens of thousands of rand over the life of your bond.

By law, banks must give you everything you need to make an informed choice. It’s your right to know exactly what you’re paying for.

The Phoenix Bonds Advantage

At Phoenix Bonds, we don’t just look at the rate. We compare all aspects of your quotations across banks - the fees, the terms, and the total cost of credit. That way, you get the complete picture and can choose the loan that truly suits your needs.

💡 Tip: When reviewing your home loan quotation, always ask: What is the total cost of credit? That’s the number that really matters.