Real Estate Investor Magazine South Africa November 2019 | Page 30

ACQUIRING
Renegotiate your home loan and
save thousands
Don’t be tied to the same interest rate
MEYER DE WAAL
Raising a home loan is often one of
the most stressful times in one’s life.
Renegotiating a lower interest rate a
few years later [2- 10 years later] can
save you thousands of Rands. You have
nothing to lose then, as your home loan is
already approved.
“I
f your own bank does not want to lower your interest
rate, switch to another bank that is willing to do so,”
says Meyer de Waal a Cape Town conveyancing
attorney. “Let us unpack it how it can be done,” and start
with the home buying process. You find the house of your
dreams and submit and offer to purchase to the seller. Your
fate is in the hands of the financial institution to approve
your home loan.
You are aware that a bank will dig deep to look into
your past payment behaviour, your exposure to debt, your
income ratio compared to your living and debt repayment
expenses and the strict “rules and regulations” of the
National Credit Act. When the financial institution finally
approves your home loan some weeks later, you are so glad
to “be approved” that the interest rate that the bank quotes
you is of little consequence as you are desperate not to lose
the house you signed for. You accept the higher interest rate
quotation, “just to get the deal done”.
The lending criteria from one bank to the other differ
from time to time as they need to expand their market share
in the mortgage industry. Financial institutions build in
extra “insurance” for them in charging higher interest rates.
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NOVEMBER/DECEMBER 2019 SA Real Estate Investor Magazine
The 100% home loan approval had an interest rate of prime
(currently 10%) plus 1% extra. The 93% home loan had an
interest rate of 10%, explains de Waal.
Few consider renegotiating a lower interest rate two
years later (and many do not realise this is possible). Many
home buyers will want to avoid the trauma and stress of
going through a home loan application process again
two or three years later and do not want to pay attorney
registration fees again.
“Do not get stuck with the same interest rate for the
rest of your home loan repayment period. It can cost you
thousands of Rands over the repayment period of a home
loan term that can stretch up to 20 or 30 years. If your
current bank does not want to renegotiate and lower your
home loan rate, apply to another bank and negotiate a
lower interest rate,” says De Waal.
The motivation behind this is that your affordability,
credit score and loan to value (this means the value of
your property compared to the original loan amount)
may have improved drastically over the years. As your
overall profile and property value improves, so your