You ’ ve found your dream home and now it ’ s time to apply for finance . Naturally , your mind defaults to your own bank ; after all , you ’ re a loyal client with a longstanding financial history , so why would they not approve you ?
Rhys Dyer , CEO of ooba Group argues that this is simply not the case . “ We continue to see differing pricing decisions and credit from the banks - regardless of whether the applicant is that bank ’ s client . It ’ s important to remember that each bank has different loan criteria and , in turn , is required to comply with the National Credit Act .”
“ Our data for Q1 of 2022 indicates that of the home loan applications declined by one bank , 45.3 % were approved by another bank when applying through ooba Home Loans – reinforcing the importance of using a credible bond originator to apply to multiple banks on your behalf .”
1 . THE IMPORTANCE OF COMPARING INTEREST RATES
Purchasing a home is the biggest investment that most of us will make in our lifetime . Therefore , it ’ s strongly advised that you remain objective and do your research . “ We ’ ve seen many buyers rushing into home loan financing out of sheer panic without comparing interest rates to make sure that they are getting the best possible deal ,” says Dyer .
“ An applicant ’ s own bank may offer them an interest rate of 7.75 % - the current prime lending rate in South Africa as of May- while another bank may offer a rate of 7.50 %, which is below prime . “ On a purchase price of R2 million with a 10 % deposit over a repayment period of 20-years , you could save R276 * per month by comparing quotes . This equates to a saving of R66 240 over 20-years .”
“ Different banks will offer you different interest rates . The bank ’ s interest rate on your home loan is linked to the prime interest rate set by the South African Reserve Bank ( SARB ) - either above or below prime , depending on your credit risk profile .”
SA Real Estate Investor Magazine JUNE 2022 31