Who To Go With For Home Loan?

[Bman]

Howzit guys,

 

We are looking at signing up at the moment for a new Home Loan.

 

Having comparative quotes from a few banks and SA Home Loans they are all pretty equal with interest rates offered.  Two Banks - Nedbank and FNB are equal to SA Home Loans though for amount and interest rate bonded.

Out of personal experience who do you suggest going with?

 

SAHL is a new concept to me with them using JIBAR and then adding a linked interest rate to that?  Is this all normal and the same risks at lending from the bank? Less, more?

 

Linked VS Fixed?

 

Capped concept? Any advice is appreciated as have 5 days to decide now that have quotes in.

 

Thanks chaps!

[Jehosefat]

JIBAR is a bit more volatile than Prime/Repo so your interest rate will jump around a bit more with SAHL than with the banks. On average it should be around the same though (JIBAR is usually a bit higher than the Repo rate although it can drop below it when a rate cut is expected).

 

Personally, go with the lowest interest rate. I've had bonds with Nedbank, FNB and Investec and they really are all much the same. It is a bit more convenient to have the bond at the same bank as your main account but not necessary.

 

Make sure you go for the access bond option if possible and don't fix the interest rate (i.e take the Prime + x% (or JIBAR + z%) rate rather than the y% rate if that makes sense).

Edited July 4, 2019 by Jehosefat

[Grebel]

All I can advise is read the fine print and make sure you understand the T&C's. If there is any chance that you may need to borrow on the loan for further improvements, purchases etc, register your home loan for a higher amount NOW. The difference in costs is minimal say between registering for R1,5 million and R2 million. You will obviously only be able to borrow up to the value of the property. However when you need the extra cash you only pay admin fees as no lawyers are involved.

 

Access Bond? 

 

Interest rates nowadays are a crap shoot. Who knows what may happen tomorrow. We decided to just see what happens and take the variable rate. (My old neighbour fixed his and shortly after that the rate dropped...)

 

Try and put any extra cash that you have into the loan.  A few hundred a month makes a HUGE difference at the end of the term. Your interest is calculated daily so don't delay the transfer if you have extra.

Edited July 4, 2019 by Grebel

[Rocket-Boy]

I have my current bond with SAHL and previous ones with Standard and FNB.

I havent noticed any difference between the 3 other than the service being substantially better at SAHL.

 

One thing to mention, if you plan on adding on then keep in mind SAHL doesnt do building loans.

The flipside of that is that if you improve the value of your property then you can borrow against the higher value and get the money back that way.

 

Im currently going through that exact exercise where Im building quite a lot on to the property and using savings/family loan which I will replace when it is completed and re-evaluated.

[Rocket-Boy]

All I can advise is read the fine print and make sure you understand the T&C's. If there is any chance that you may need to borrow on the loan for further improvements, purchases etc, register your home loan for a higher amount NOW. The difference in costs is minimal say between registering for R1,5 million and R2 million. You will obviously only be able to borrow up to the value of the property. However when you need the extra cash you only pay admin fees as no lawyers are involved.

 

Access Bond? 

 

Interest rates nowadays are a crap shoot. Who knows what may happen tomorrow. We decided to just see what happens and take the variable rate. (My old neighbour fixed his and shortly after that the rate dropped...)

 

Try and put any extra cash that you have into the loan.  A few hundred a month makes a HUGE difference at the end of the term. Your interest is calculated daily so don't delay the transfer if you have extra.

This is great advice.

[Chris_]

Another negotiating tool is to say you'll move all your banking to them if they give you a better rate. I did that with Investec a while back, they took an extra 0.25% off the home loan rate I think it was. So only try that with somewhere you like...

 

I'd say go linked rate, making a call on where rates will go is a pure gamble and probably not worth the hassle.

 

Check carefully on something similar to the old style access bond before you sign, I'm not sure the same thing is currently offered.

[Bman]

JIBAR is a bit more volatile than Prime/Repo so your interest rate will jump around a bit more with SAHL than with the banks. On average it should be around the same though (JIBAR is usually a bit higher than the Repo rate although it can drop below it when a rate cut is expected).

 

Personally, go with the lowest interest rate. I've had bonds with Nedbank, FNB and Investec and they really are all much the same. It is a bit more convenient to have the bond at the same bank as your main account but not necessary.

 

Make sure you go for the access bond option if possible and don't fix the interest rate (i.e take the Prime + x% (or JIBAR + z%) rate rather than the y% rate if that makes sense).

Makes perfect sense thanks, in saying that with your advice if the banks are offering the same rate as SAHL - one should go with a bank instead then? With SAHL being a bit more volatile?

[Chris_]

You're probably past this stage but I've heard good things about Better Bond if you're still shopping around.

[Bman]

I have my current bond with SAHL and previous ones with Standard and FNB.

I havent noticed any difference between the 3 other than the service being substantially better at SAHL.

 

One thing to mention, if you plan on adding on then keep in mind SAHL doesnt do building loans.

The flipside of that is that if you improve the value of your property then you can borrow against the higher value and get the money back that way.

 

Im currently going through that exact exercise where Im building quite a lot on to the property and using savings/family loan which I will replace when it is completed and re-evaluated.

 

We actually do plan on adding on, but slowly with savings and on our credit cards or family loans - which sounds like is easy to do and then re-value to push up loan if need be thanks

[Bman]

You're probably past this stage but I've heard good things about Better Bond if you're still shopping around.

 

Not at all - we used betterbond that wrote to all the banks they are affiliated with - FNB, Std, Absa.  They then also negotiate on your behalf with them further.

[Jehosefat]

Makes perfect sense thanks, in saying that with your advice if the banks are offering the same rate as SAHL - one should go with a bank instead then? With SAHL being a bit more volatile?

 

When I say JIBAR is more volatile I just mean that it can fluctuate a bit rather than the Repo rate which only moves when the SARB Monetary Policy Committee changes it. It really isn't very volatile though, like the gap between the two only fluctuates by a few basis points. The graph below shows both rates over the last year:

 

if you want to grab all the historical rate data, it is available at:

Repo Rate (https://wwwrs.resbank.co.za/webindicators/ExchangeRateDetail.aspx?DataItem=MMSD008A)

JIBAR (https://wwwrs.resbank.co.za/webindicators/ExchangeRateDetail.aspx?DataItem=MMSD502A)

Edited July 4, 2019 by Jehosefat

[Help.Me.]

All good advice, just another tip. If the banks wants to sell you their life cover be very careful, READ ALL THE FINE PRINT.............. and get quotes from the other role players as well. What i have found with the banks the life insured value reduces as the bond amount reduces BUT the premiums goes up!!

[coppi]

Absa offers a Oneaccount if you qualify for it...............its not a bond as such but a loan amount (linked to how much you qualify for ). If you are responsible and can handle credit, you can use it for anything you want. Handy and very flexible, if you ever need extra cash later on you don't have the hassle and costs to apply seperately

[Grebel]

All good advice, just another tip. If the banks wants to sell you their life cover be very careful, READ ALL THE FINE PRINT.............. and get quotes from the other role players as well. What i have found with the banks the life insured value reduces as the bond amount reduces BUT the premiums goes up!!

 

In addition to that, you don't have to take the home owners insurance offered by the bank either. There is a lot of money to be saved by shopping around. As an example, my bank quoted me a figure on our current property. I saved just over R400 on monthly premiums by shopping around. (Don't fall into the trap of insuring the property for what you paid for it either. Let the bank value it and give you a quote for insurance as it will state the insured value. Use that value to get alternate quotes from independent insurers)

 

Be aware of the exclusions/limitations as well. Sometimes you need to provide documentation e.g. Geotech Reports for comprehensive cover on certain items.

 

Edit: I was also advised to separate my insurance from my bond payments. It had something to do with long term costs or something along those lines.

Edited July 4, 2019 by Grebel

[M L]

Any updated news/advice on taking out a mortgage for a property?

Seems like some of the banks offer discount on the bond initiation fee?