Different home loan options available to the home buyers in SA

Aug. 19, 2010 - PRLog -- Home Loans

In South Africa there is a variety of different home loan options available to the home buyer. Before you start take time to become familiar with the home loan industry in South Africa by doing some research by looking at the bank’s product information in their branches or on their websites.  Home buyers also have the option of using a mortgage originator to source the best interest rate or do all the work themselves.

Choosing the best interest rate option for your home loan is very important and can make a big difference on the overall amount you end up paying on your bond. Interest is the additional fee that you pay when repaying the loan and can therefore differ from bank to bank. The higher the interest rate is, the more your loan will cost you in the long run so try to negotiate the lowest rate possible on your home loan. In order to get the best interest rate, it’s important to shop around and compare loan rates and terms before deciding on a particular home loan. Request home loan quotes from a variety of banks and finance companies, as well as online lenders. Your credit rating and the collateral that you use can also have an effect on the interest rate that you are charged on your home loan so make sure to give all the necessary information.

Home loans in South Africa can either be “fixed rate” or “variable rate” loans. A fixed rate means the interest rate charged is fixed for a specific time i.e. two years or more. This option is best when the interest rates are low or to make budgeting easier. A Variable Rate is better when the interest rates are higher, because they can go down if the interest rates go down. However this rate will also go up when the interest rates goes up

Since the introduction of the National Credit Act (NCA), there seems to be a wide variation in the banks’ lending criteria, and, in some cases, one bank will approve a loan that was declined by another bank.  In this case, it is important to shop around for the best interest rate as the banks are using different models to determine whether to grant you a loan and, if so, at what rate.

The NCA places the onus on credit providers to ensure that you can afford to repay a loan or credit agreement.  In terms of the NCA, the maximum interest rate you can be charged on a mortgage bond is the repo rate multiplied by 2.2, plus five percentage points. However, most people qualify for a mortgage bond at between 1.6 and 1.8 percentage points below the prime rate.

In practice, people who are regarded as really good credit risks (high earners with low debt and a good credit record) receive 2.5 percentage points below the prime rate, while those who are not a good risk can obtain up to four percentage points above prime. Depending on your profile, the banks may be slightly negotiable within this range.

All the banks say they will not change the interest rate you are paying on an existing home loan as a result of the NCA. Your rate will change only if it is linked to the prime rate and the prime rate changes.

With new loans, as was the case with loans in the past, the banks say the interest rate they charge you depends on your individual risk profile – how much you borrow, how much you earn and your credit record.

By choosing Mortgage Plus for a loan, you will get that continual service to make sure you are getting the best deal possible.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Call us on 011.327.4489
http://www.mortgagepluscc.co.za

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Mortgage Plus Bond Originators specialises in Mortgages, Bonds, New Home Loans, Building Loans, Further Loans, Bond Switches and Debt Consolidation Home Loans, Personal Loans and Insurance in South Africa.
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We will find the right deal for you.Guaranteed!