South African banks are granting more home loans but which is the best? These banks offer loans with lower deposit requirements at the best interest rate.
What is a home loan?
Basically, there are very few people who can afford to buy a house outright, but this doesn’t mean you have to rent forever. By securing a home loan from a bank, you’re able to buy your own house while paying off the bond with interest. The bank will retain the title deed until the home loan is paid off in full.
What is the interest rate?
In most home loan agreements, you will pay off the home loan over a period of about 20 to 30 years, as well as the interest. The interest rate on your bond will be determined by the prime interest rate – as set out by the South African Reserve Bank – plus a percentage determined by the bank lending you the amount.
What will banks look for when you apply for a home loan?
When you approach a bank for a home loan, there are a number of factors they will consider before deciding whether you qualify for a loan, and then what the interest rate will be on the repayments. These include:
Your income and job stability
Your credit score
Your debt-to-income ratio
Any other income
The size of the deposit you’re able to put down
A thorough home evaluation to ensure that the home loan matches the actual value
What are the costs to consider besides the bond?
Beyond the home loan repayment amount, you’ll need to be able to pay for a range of other expenses associated with home ownership. Banks will need to see that you can afford the:
Bond registration fees
Deeds office fees
Rates and levies
Outside of these, there are also costs related to moving, repairs and maintenance, utilities, insurance and security as well.
Why use a bond originator for a home loan?
You will be able to apply for a home loan directly through your bank, however, your application might get rejected, or it could be approved with a high-interest rate attached. It’s best to shop around for the bank with the best rate, but this can be quite a daunting undertaking if you’re new to the process. By working with a bond originator, like Mortgage Market, you’re benefiting in a number of ways.
Using a bond originator means you submit one set of paperwork and they deal with the rest. You don’t have to repeat the process with a number of different banks and deal with the bank-and-forth.
When you’re dealing with a bank, they’re looking out for the bank, not for you. When you’re working with a bond originator, they are driven to find you a home loan at the best rate, and they’ll work with a number of banks to make this happen. Mortgage Market works closely with the following banks:
SA Home Loans
Bond originators already have good working relationships with several banks, and are able to negotiate better rates easily. Because banks are benefitting by getting a significant amount of business through bond originators, they’re likely to work quite closely to achieve the same goal.
Home loans are their business, day-in, and day-out, so they have all the necessary information related to the home-loan industry, including the documents required and what you can expect from the process. For a first-time home buyer, this information is invaluable.
High success rate
The good working relationship with banks, understanding of the home loan market, and thorough briefing on all home loan applications mean that bond originators tend to have a much higher success rate of getting home loans approved. In fact, with the recent slash in interest rates, even 100% home loans have been approved.
The entire process of a home loan application is streamlined through bond originators who will motivate and monitor the progress of each application. You can also be assured of constant updates so that you’re kept in the loop the entire time. It often only takes a matter of days before you receive your answer, one way or another.
A bond originator will assist you in getting pre-approved for a home loan in order to streamline the process further. With bond pre-approval, you’re able to show an estate agent and bank you’re a serious buyer. It will also give you a solid idea of your purchasing power so that you’re only looking for homes you can actually afford. A pre-approval certificate can be issued within 24 hours of receiving your personal information, including:
Your ID document
Your proof of address
A signed consent form
Three months’ worth of payslips and three months’ of bank statements (although it’s six months if you earn commission)
Once you’ve received your home loan pre-approval, it is valid for a period of three months, after which you can re-apply if necessary.
A quick fix
Through a bond originator, you will learn of any issues that might prevent you from getting a home loan, and you’ll be given suggestions on ways to improve your chances. Some of the suggestions could include:
Improving your credit rating by meeting monthly instalments and minimising your credit.
Improving your debt-to-income ratio so that your debt is sitting around 36%.
Saving up for a bigger deposit to offset the cost of the home loan.
Amending any incorrect information on your credit score such as mistaken identity or identity theft.
When you’re looking to buy a home, and now is a good time considering the low-interest rates, you don’t want to be delayed by having to attempt the entire process yourself. When working with industry experts like Mortgage Market, you’re saved the time and hassle of endless paperwork and communication, while still coming out with the best possible interest rate.