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

Banks have differing criteria and product ranges for specific market segments. Logically the first-time home buyer has a vastly-altered profile to the multi-millionaire private bank client seeking out his status-symbol property.

Property is the largest single investment most people undertake and not a decision made more than a handful of times in life. It is therefore a daunting, unnerving experience that, without professional assistance, can cause sleepless nights and cold sweats.

Bond originators work closely with the banks to understand the precise parameters required by the financial institutions, placing them in the position to advise clients on how to accurately present the deal. The essence of mortgage originators is that they can offer clients appropriate advice and choice.

Typically bond origination provides the public with assistance through relatively unchartered territory, while lowering bond costs and stimulating inter-bank competition. Around 60% of South African bond approvals have followed the origination route against an estimated 30% flow in Australia and Canada, reflecting the vital link mortgage origination plays in the home ownership chain.

Mortgage originators have agreements with the four major banks, several of the smaller institutions, private banks and other non-bank lenders. This means those clients fortunate enough to qualify for a loan from more than one institution has the enviable choice of accepting the one offering the best rate and terms.

Bond origination capitalises on the short window of opportunity buyers have in which to secure finance and confirm their purchase. The industry provides unbiased and extensive product knowledge that caters for each client’s specific needs, thus boosting their chances for a successful application while recognising that securing the bond and determining the associated costs is pivotal to the decision-making process.

Banks want to reduce the amount of time wasted on unfeasible loan applications and that is the value bond originators offer to both the financial institutions and the man-in-the-street – having the expertise to weed out those applications that should never be placed before the banks. As home loan specialists offering clients a free service, consumers secure from mortgage originators the best chance of getting a home loan on the best terms with the advantage of one-stop shopping and the convenience of choice.

Established a decade ago in South Africa, bond origination has matured significantly as a professional lifeline for potential home owners and estate agents. Bond origination is the process of matching mortgages that suit specific individual needs.

The key lies in giving clients a choice of banks and thus providing a hassle-free service without incurring additional costs.

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