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.

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

www.mortgagepluscc.co.za

Are you a first time home buyer?

 Are you looking for a loan? Do you want to know what you qualify for when buying your first home?

If you are a first time home buyer and you’ve always dreamt of the new house that you will own one day, you must have thousands of questions running through your mind. You probably don’t actually know where to begin!

And I guarantee that those questions range from:

What are the best home loan deals for first time home buyers?
Should I go for a fixed rate or a variable rate?
How do I get my first mortgage or home loan?
Should I go to a first time buyer mortgage specialist or a bank when I’m buying my first home?
How much can I afford to borrow for my first mortgage, and how much will it all cost me?

To the most important of the lot, CAN I AFFORD MY FIRST HOME?

Well, a good place to start is our first time affordability calculator section that will instantly tell you what your monthly repayments would be on any given home loan. Being a first time home buyer you’re left with plenty of options. The first being a 100% +home loan (for the right purchaser). Another option would be just a ordinary loan. Then there’s the option of a joint bond i.e. with a friend, girlfriend, partner or parent and last but not least a shared ownership loan. What this allows you to do is buy with an entire group of people thereby cutting down your monthly costs but obviously adding more partners.

The option I’m going to talk about here is a First Time Home Buyers Loan. A first time buyers loan is a 100% + bond (for the right purchaser). This means you’re getting 100% + loan (for the right purchaser)  to value of the purchase price for the bond you requested from the banks PLUS roughly 8% to pay for your bond registration and transfer costs. This obviously means that your bond is going to cost you a little more, your interest rate won’t be so great and the downside is that the 8% is going to take you an additional 3 to 5 years to pay off, but for those first time buyers who need the extra cash, the FIRST TIME LOAN is the IDEAL solution.

Requirements:

1. MOST IMPORTNANTLY – An absolutely clear credit record – so check yourself out with the credit bureaus
2. No bounced debit orders on your bank statements – watch for this and don’t get caught
3. 3 months bank statements - preferably originals or if internet statements stamped at the branch
4. Copy of your latest salary slip
5. Copy of your ID

Each bank has slightly different requirements for a 100% + bond:

First Time – ABSA First Time Home Buyer:

- Min first time bond amount of R120 000 with no maximum amount
- Trusts, cc, companies – 80% – 90% with a stable employment for 2 years
- You must be a South African citizen with a CLEAR CREDIT RECORD
- A minimum single income of R6000 and joint of R10000

Bond Plus – FNB First Time Home Buyer

- Min bond plus amount of R150 000 to a maximum of R2 mil
- Trusts, cc, companies - 80% – 90% loan with stable employment of 2 years
- You must be a SA citizen with a CLEAR CREDIT RECORD
- A minimum single income of R9000 or a joint income of R11000
- Variable interest rates offered

Jump Start – STD Bank First Time Home Buyer

- Min bond amount of R100 000 with no maximum amount
- Trusts, cc, companies - 80% – 90% no costs included. However they have been known to offer 108%
- Must be an SA citizen, employment proof needed with an acceptable credit record
- If 108% loan is asked, there might be an extra charge for “cost inclusive” risk
- Exclusions include vacant land and commercial property loans
- Variable rate or fixed rate

Alpha Bond – Nedbank First Time Home Buyer

- Min bond amount of R100 000 to a max of R2 million
- Trusts, cc, companies – 80% – 90% loan amount (including bond costs)
- You must be a South African citizen with a CLEAR CREDIT RECORD
- A minimum single income of R5000 commission earners, 12 months with the same employer and 6 months commission statements
- Exclusions – 2nd Time buyers, temporary employment building and home improvements loans
- Variable rate or 1, 2, 5 year fixed rate contract