Shopping for a home loan
Must I pay a deposit?
“Most credit providers require a deposit and the amount will depend on terms of the mortgage loan that the customer qualifies for and will differ from provider to provider; but the average is generally between 10% and 20%,” says Carel Grönum, head of Absa Home Loans.
There has been a slight increase i n banks granting 1 00% bonds, and sometimes the design of these home loans is rather innovative. One such product is Absa’s ‘Family Springboard’ whereby f amily members or friends can provide collateral security equal to 10% of the purchase price of the property as a substitute for the actual cash deposit.
What size deposit should I put down?
the debt over the term of the loan.”
Ho w importan t is my credit record?
Extremely important when applying for any sort of credit facility, especially a mortgage loan because of the longterm commitment, says Grönum. “The better your credit history, the greater the likelihood that you will be granted a favourable loan to value and price.”
Ho w do I get a better interest rate?
The interest rate awarded is based on the client’s risk profile that is influ- enced by their level of affordability to service the loan over the mortgage term. A healthy credit record and the deposit amount are also key factors. Providers will also assess the level of security they can attain from the property relative to the bond amount being applied for, says Grönum.
Should I shop around for a bon d?
“I would definitely shop around and give all the banks an opportunity to quote,” says Galileo Capital’s Ingram. “Banks are driven by a range of criteria. You may think that having banked with your bank for the last 20 years entitles you to the best rate. But lending criteria depends on their mortgage business and while they may sweeten their criteria and rates slightly to increase their mortgage book, that has nothing to do with you, the client.” The opposite is true if your bank is doing too much mortgage business and thus increases its rates to push the business elsewhere, he adds.