Shop­ping for a home loan

Finweek English Edition - - MONEY -

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.

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