YOUR MORT­GAGE?

Even a 0.25% re­duc­tion in your mort­gage could save you tens of thou­sands of rands, but how open is your bank to the dis­cus­sion? Maya Fisher-French finds out

CityPress - - Business -

WILL YOUR BANK BE OPEN TO NE­GO­TI­A­TION?

City Press spoke to the banks to find out what cri­te­ria they would con­sider when it came to an ap­pli­ca­tion to re­duce an ex­ist­ing mort­gage rate.

Through the re­sponses, FNB ap­peared to be the most will­ing to re­view a mort­gage rate, which was borne out by our reader ex­pe­ri­ences.

FNB: Ac­cord­ing to Stan­ley Mab­ulu, FNB home fi­nance divi­sion chan­nel man­age­ment head, in terms of FNB’s home fi­nance prod­uct rules, “an ap­pli­ca­tion for a rate re­view can be sub­mit­ted and pos­si­bly con­sid­ered 24 months af­ter the date of reg­is­tra­tion of your bond”.

When mak­ing the as­sess­ment, FNB would con­sider the fol­low­ing fac­tors:

● Credit score: If your credit score has im­proved since taking out the loan, there is a chance you could qual­ify for a bet­ter rate.

● Vari­ables of home loan ac­count: If your in­come has in­creased sig­nif­i­cantly or if the value of your prop­erty has in­creased, those would be pos­i­tive fac­tors when ne­go­ti­at­ing a bet­ter rate.

● Re­duc­tion of out­stand­ing bal­ance: If you have been pay­ing ex­tra into your mort­gage and the orig­i­nal out­stand­ing bal­ance has been re­duced by 15% equal or greater to the reg­is­tered bond amount, FNB will con­sider a re­duc­tion in your in­ter­est rate. You need to de­cide if you are pre­pared to for­feit ac­cess to those pre­paid funds to have a lower rate.

Stan­dard Bank: Stan­dard Bank’s ap­proach is to only of­fer a bet­ter rate if you ex­tend the loan. The bank’s costs of run­ning a mort­gage book are fixed, so a big­ger loan would mean more profit, hence the abil­ity to of­fer a bet­ter rate if you can af­ford the re­pay­ment.

Andrew van der Hoven, head of home loans at Stan­dard Bank, says: “The most com­mon op­tion is where fur­ther lend­ing is ap­plied for as the re­pay­ment his­tory is con­sid­ered when the price on the fur­ther loan is ne­go­ti­ated. Stan­dard Bank also of­fers ad­di­tional value for cus­tomers who re-bond their prop­erty with Stan­dard Bank or where ad­di­tional prop­er­ties are added to ex­ist­ing fa­cil­i­ties.”

Van der Hoven adds that the bank will of­fer bet­ter rates to its own cus­tomers, so it pays to do your pri­mary bank­ing busi­ness with the same bank as your home loan.

Absa: Absa will assess on a case-by-case ba­sis, but is not that keen, even if your risk rat­ing changes.

Ge­of­frey Lee, man­ag­ing ex­ec­u­tive of home loans at Absa, says: “It is im­por­tant to note that a home loan is a long-term trans­ac­tion en­tered into over a num­ber of years. Mort­gage in­ter­est rates are based on the over­all risk pro­file of the cus­tomer at the time of in­cep­tion of the home loan. In other words, the bor­row­ing risk that the bank car­ries is based on the risk pro­file of the cus­tomer at the time of ap­proval of the home loan.

“Given the du­ra­tion of the loan agree­ments, it is prob­a­ble that the cir­cum­stances of cus­tomers may fluc­tu­ate over time. With this in mind, it would not be prac­ti­cal for the bank to ad­just the in­ter­est rates [pos­i­tively or neg­a­tively] when­ever the cus­tomer’s risk pro­file or credit his­tory im­proves or de­te­ri­o­rates.”

Ned­bank: Ned­bank is def­i­nitely not keen to re­assess a cus­tomer’s mort­gage.

The bank says: “We have pro­vided the best rate at the time of ap­pli­ca­tion given the cus­tomer’s his­tory with the bank and risk grad­ing at the time. The Na­tional Credit

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