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The current, particularly low loan costs in South Africa have started off an abrupt and sudden call for private property bonds. This was particularly recognisable in June, after the low deals of April and May when the repressed interest for lodging brought about an inviting ascent in home deals.

It is unlikely that the spike in sales will be maintained, there is no clear evidence that a higher level of demand for bonds will continue and many will be applying for the first time. However, South Africa’s weak economic growth, coupled with quickening inflation, will inevitably result in a significant drop in home loan approvals for a long time to come. 

South African banks will have to face higher capital reserve requirements with the current economic climate.  They will therefore ensure that they are engaging in quality business and will become more particular when assessing credit and loan applications.

Here are a few guidelines to consider when you apply for a home loan

Always apply for the full amount you qualify for

Buyers should apply for the maximum bond which they qualify for, not the smaller bond values ​​that banks would prefer. If the applicant has any form of deposit, it should be paid into the bond soon after registration being submitted as a deposit in advance. This will ensure withdrawal again if needed in the future. If the deposit is paid towards the purchase price and a lower bond amount applied for, this is not possible.

Work out your budget

You need to work out your income and expenditure to determine what you can afford.  It’s best to always be aware of your personal finances so that you know where there’s room for improvement.  

Getting pre-approved will also help you determine what type of deposit to make.  Once you know what you can afford, try to see if homes in this price range suit your wants and needs.  If the property you are considering is outside your price range, carefully reevaluate your monthly expenses to determine where you might be able to save extra to be able to afford a larger home loan.  If not, play it safe in a realistic price range. 

Go for a longer loan term

You don’t have to go for the usual 20-year bond.  With a bond of maximum value, the bondholder can often pay every month any additional cash, i.e. paying above the expected rate and thus build up a cash reserve that is immediately accessible for the future.  The money paid reduces monthly interest on unpaid debt.  Bondholders who took this advice have often found themselves not only able to weather tough times but also able to pay off their properties much sooner than expected. 

Apply to all the banks

Applying for a home loan through your private banker may not necessarily get you the best deal, as your banker’s first priority is getting the best deal for the bank.  Also, if your application is denied, you will need to go to another bank or wait for circumstances with you or your bank to change.  Meanwhile, time is running out on your offer to buy and you may end up losing the home you have your heart on.  There are things a bond maker can tell you that no index ever will.  The truth is that you can’t know if you got the best deal from a bank if you only approached one bank. The applicant who receives offers of credit from more than one bank puts himself in a strong position to negotiate with one or more such institutions to improve his position.

It is best if the applicant works through a bond originator like Secubond.  It is an advantage to understand the full position of the customer and to build a good reputation for oneself by securing good conditions.  Since we at Secubond has worked with multiple banks for years, we know how to tick all of the boxes on the application and tailor the application to each bank to get the most out of their terms.  It should also be noted that our service, which can make a huge difference to the client’s financial situation, does not cost them anything.