It’s great to have a selection of home loan quotes to choose from. You can save yourself significant amounts of money in the long-term by choosing the best home loan quote. But how do you determine which one is the best?
Use one of our bond originators to help you compare and negotiate the following terms and conditions in your home loan offers:
Be mindful of the loan amount offered. The bank will not always grant the loan amount requested by the applicant. Banks assess risk on a Loan-to-Value (LTV) basis – this is the loan amount divided by the property purchase price. The bank conducts their own valuation of the property, which may be different from the market value of the property. If the bank values the property at less than the market price, they won’t grant you a loan for the full amount.
In addition, certain types of applicants will be deemed as higher risk (such as non-SA citizens, self-employed start-ups and individuals with poor credit history). The bank will have their own criteria for maximum LTV for each type of applicant. This is why it is important to apply at all the banks – where you may only qualify for a 75% LTV at one bank, another can grant you 100% LTV.
This is the main factor you should be looking at. Interest rates are determined primarily by two factors:
In addition, each bank may offer an additional interest rate concession if you move your banking. The criteria is usually met by opening a cheque account with the bank and signing a debit order for the monthly home loan repayment. These rate concessions can be quite substantial, ranging from 0.10 – 0.55% discount on the quoted interest rate (e.g. on a R1 million loan over 20 years, that’s a total saving of up to R82,000 over the term of the loan!).
This is the length of time over which you will be paying off the home loan with monthly instalments. The home loan term is usually 20 years, but you can get longer (25 to 30 year) or shorter (15 year) home loan terms. A 30-year term means you have more time to pay it, but the interest rates may be higher.
You may need a longer term to reduce your monthly repayment in the short term, but be in a better position to pay more in future. There are multiple options to offset the loan term, such as renegotiation or setting up an access/flexi bond. Ask your bond originator for more information.
There are many costs for the purchaser buying property to consider, the main ones being:
The bank cannot offer a discount on the transfer attorney fee or the transfer duty, as they have no oversight on these processes.
However, they may offer discounts on the bond registration attorney fee. These attorneys are selected by the bank of your choice from their preferred panel attorneys. Each bank will have specific agreements with their bond registration attorneys. Some typical discounts you might see would be:
Note that these ‘typical’ discounts can be renegotiated at any time and therefore subject to change.
The bank can also choose to add certain fees – including the transfer fee and transfer duty – to the value of your loan (resulting in a maximum 105% LTV). The purchaser then ultimately pays these costs off slowly, with interest, over the course of the loan term. This option is typically only available to first-time home buyers.
All banks have different reward schemes. They may be included in the home loan offer as an additional benefit, particularly for first-time home buyers. Some common rewards schemes include:
If rewards are issued, they are typically quantified by the size of your loan/repayment.
Look out for special conditions in your home loan offer that may impact your chances of the property transfer going through to registration. Some common ones include:
Our bond originators will be checking your offers and highlight any of these – as they are considered outside the realm of normal terms and conditions of a home loan offer under the National Credit Act.
The future use amount is an additional “pre-approved” loan amount offered by FNB. It is an indicative amount that you can access 6+ months after the first bond repayment on your primary loan. It is not fully approved yet and subject to a second application and credit check. The benefit is that the higher bond amount has already been registered over the property and thus the application and eventual payout can be expedited.
It is similar to any other building loan application you would do with another bank. In other words, you can’t access the funds unless you are using it to increase the value of the house. It typically requires approved plans for the improvements/extensions to the property.
There are many things to look at when comparing home loans, but rest assured that your bond originator will help you better understand your options. Give yourself with a choice between multiple packages by applying for a home loan with Phoenix Bonds. We submit your application to all the most competitive banks, allowing you to compare the factors above and secure the best possible home loan deal.
Contact us now to get started!
Get the latest updates in your email box automatically.