The Banks Want Your Home Loan

There isn’t a person in the country who isn’t watching, with concern, the political developments and their economic impact.  We all feel the economic pinch.  It’s prudent to plan wisely and avoid living beyond ones’ means.  Economists will tell you that things could indeed get worse – so plan accordingly.

History will show, though, that although property markets move in cycles, property has always shown to be a safe investment over time.  There really is no such thing as a “quick buck”.  Easy money is high risk and more often than not the risks just aren’t worth it.

But when it comes to property, even the banks appreciate that the risks of lending you money are mitigated.  And so, unlike the global financial crisis of 2008-2012, the banks are still keen to give you home loan finance if you have a decent credit record.

It’s not common to see 100% bonds these days.  The risks for the banks simply are too high, as they expose themselves to the risk of insufficient equity in your property to settle your debt, should you default.

However, if you have a significant deposit to invest, such as 20% or more, the banks look upon your application in a much more favourable light.  That doesn’t mean obtaining a higher loan-to-value bond is impossible – it’s just less likely.

The reality is that, if you’ve managed your financial affairs responsibly, you have a steady job with a reliable salary, and you have some cash to invest, the banks want your business.  They’re much keener to do business with you than they have been for a while.

It’s also good to see that there is some healthy competition between the banks at the moment.  We’ve seen banks offer much better rates for low-risk clients.  So it makes sense, if you’re a buyer, to use a mortgage originator to shop about for the very best deal.

Banks would prefer you dealt directly with them – but why limit your options?   At Harcourts Platinum, we use Ooba, one of the leading mortgage originators in South Africa.  We’ve seen how Ooba fights for the buyer to get them best offer possible, without any predetermined loyalty to one particular bank.

If you’re one of the many consumers with a less than perfect credit history, why not speak to a mortgage originator to find out what you need to do to rectify the situation?  It’s possible, within a relatively short period, to get yourself to the point where you become a desirable client again.  But do something about it now, not later when you start house-hunting, as your journey will only end in disappointment.

If you are in good standing, then now is a great time to find the property of your dreams and apply for a home loan.  Find out what you qualify for, and allow for interest rate increases.  Securing a good home loan deal now will save you some serious money in the long run.

Steve Caradoc-Davies

Principal, Harcourts Platinum

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