Types of Loans

South Africa’s Leading banks offer their clients a variety of home loans to choose from. A bond consultant will assist you in selecting a loan which best suits your requirements, and also help you through the loan application process. Below is a list of loans available:

First time homeowners loan

First time homeowners home loans are specialist loans, which are rapidly becoming popular as they allow cash restricted first time buyers to lend the total property sale value. This means that registration and transfer costs can be included within the purchase price of the residential property “Depends on bank to bank and product requirements” No deposit is required, providing first time buyers with an excellent opportunity to enter into the property market.

Variable Rate Loan

With a variable rate loan the interest rate is linked to the base home loan rate which may either rise or fall, depending on current market conditions. Should for example the base rate decrease by one percent so will your interest rate, and therefore if the base rate increases so does the home loan rate.

Fixed Rate Loan

With a fixed rate loan, the interest rate stays fixed for a specified period, usually between one and two years. Compared to other loans, the fixed interest rate will be slightly higher than the base home loan rate when the loan is taken out. A fixed rate loan protects the buyer from increasing interest rates, and provides a security in knowing exactly what their payments will be. Unfortunately fixed rate loans do not allow clients to benefit from any decreases in the interest rate over the fixed period.

Capped Rate Loan

Capped rate home loans allow clients to take advantage of both increases and decreases in the current interest rates, however they feature a maximum rate which prevents the home loan applicant from paying more than the capped rate. These home loans are not always available from banks and generally speaking, the qualifying criteria are often more stringent.

Reducing or step down loan

Also an extremely popular option amongst homeowners, the step down or reducing interest rate home loan guarantees a decrease in percentage in steps, for example 0.25% every six months for an agreed period of time, usually less than 5 years. This reduction of rates will save the homeowner a fair amount, and applies regardless of increases and decreases in the interest rate.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Question and Answers regarding Home Loans in SA

Q: I am in the process of buying a home and require a bond. My first thought was to apply directly with my bank, however a friend told me about something called Mortgage Origination. What is Mortgage Origination and why do I need a mortgage originator?

A: Mortgage origination is the business of negotiating a home loan with a bank on behalf of a prospective property owner. Mortgage originators give you independent advice on choosing a home loan and help you obtain it without the hassle of doing all the legwork yourself. Some originators, like Mortgage Plus, offer services that may help a buyer, like advice on estate agents in the area, how to complete the sale agreement, etc.

Because your home purchase is probably the most expensive one you’ll make in your life, the home loan itself is an important financial decision and the benefit to be gained from making the correct choice can amount to savings of hundreds of thousands of Rand over the life of the loan.

Q: I am confused. What is a Variable Rate Loan vs. a Fixed Rate loan?

A: With a variable rate loan, your interest rate is linked to the base home loan rate which moves up and down depending on market conditions. If the base rate decreases by one percent, so will your interest rate, and of course if the base rate increases so does your home loan rate.

With a Fixed Rate Loan however, your interest rate is fixed for a specified period, generally between one and two years and is generally slightly higher than the base home loan rate when the loan is taken out. A fixed rate loan protects you from rising interest rates and gives you the certainty of knowing exactly what your payments will be. Bear in mind however that it does not allow you to benefit from any decreases in the interest rate over the fixed period.

Q: My husband and I are expecting our third child so we are in the market to buy a new, bigger home but with the current interest rates and uncertainty in the property market at the moment, we really need sound advice on whether to buy a new home, build from scratch or renovate our existing home.

A: Whether you are buying an existing home, building a new one or renovating your current abode, taking the first steps towards home ownership is a daunting prospect. Take heart – no matter how intimidating that mountain may appear, scaling it will always be easier with sound advice.

Property’s primary law is position – the area in which the home is located and the market value of the homes within that suburb. Discussing the prospects with family and friends around the braai or the dinner table provides a valuable perspective on the intangible elements of local amenities, community living or double-storey homes when there is a new baby in the crib.

Building and renovating carries the guiding principle – do not over-capitalise the property relative to the neighbours. Simply put: building or extending the property into a five-bedroom mansion with an Olympic-size swimming pool in an area where the bulk of properties have three bedrooms on small plots is not economically sensible.

Conversely, renovating the smallest property in a prime area promises a long-term return that more than compensates for the renovation costs. Essentially, bathrooms and kitchens sell properties so upgrading those assets substantially improves the home value.

There is no substitute for professional advice. Mortgage Plus  is one of the country’s top mortgage originators and offers free advice to home owners and buyers. Whether buying, renovating or building, our consultants can guide you through the process step-by-step, complete the paperwork and arrange and negotiate with the banks a finance package to suit your individual needs.

By choosing Mortgage Plus for a loan, you will get professional advice 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.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za