How much interest should I expect on a home loan?

xosunshine

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I've recently begun the process to purchase my first home for R600K, with a 25% deposit. So the amount I'm looking for from the banks is R450K.

I went through a bond originator (recommended by the estate agent), who came back with the following: ABSA declined, Standard Bank offered prime +5.25% and FNB offered prime +2%. I wasn't happy with any of these options and the process felt extremely rushed (I should have had 5 days to look over FNB's offer, but the originator sent it to me 1 day before it was due) so I've decided to continue looking for a better interest rate.

I went to Standard Bank, who I have banked with for 13 years (I changed my salary to FNB about 2 months ago, though, and did mention I'd be willing to change it back if they could offer me better interest) and was told straight away to not even bother trying to apply with Standard Bank.

I spoke to a consultant from SA Home Loans who checked my credit rating. She said it was fairly low due to the fact I have no store cards, car payments and have only had a credit card for 3 months (which I pay in full on the 1st of every month). Clearly this is the reason why the interest banks are charging is so high, but shouldn't it make a difference that I am able to pay a 25% deposit?

Due to my credit rating, what kind of interest can I hope for? Was FNB's offer of prime +2% as good as it's gonna get?

If anyone has any experience with SA Home Loans, please share, particularly in regards to the Edge home loan they offer. I don't know anyone who has gone through them, but from what I've found online they seem quite promising

Thanks!
 
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schuits

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I had the same situation a while back.

Best offer I got was from SA Homeloans which I contacted myself. Haven't had any issues with them at all.
 

furpile

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The problem is you used a bond originator. Now you cannot go to your bank and try to get a better deal, you have to work through the originator. Ask them to try and get a better rate from FNB. I have gotten 2 good deals from Nedbank, the first one was without any credit rating, so that is not the deciding factor. Apply directly with the bank and then you can try and get a better rate by switching all your business to them. Sad thing is, these days the "bankers" cannot do anything, they just submit the application and there is a separate home loan division making the decision. The banker cannot even talk to them about the application, but they can send a recommendation with the application. I am not sure what the current going rate is for home loans, but prime +2 seems a bit steep, especially with your large deposit and the size of the loan. Go talk to different bankers, and if they tell you to not even bother applying, report them.

My only issue with SA home loans was their large deposit requirement. If you have that they should be fine.
 

calgal90

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I've recently begun the process to purchase my first home for R600K, with a 25% deposit. So the amount I'm looking for from the banks is R450K.

I went through a bond originator (recommended by the estate agent), who came back with the following: ABSA declined, Standard Bank offered prime +5.25% and FNB offered prime +2%. I wasn't happy with any of these options and the process felt extremely rushed (I should have had 5 days to look over FNB's offer, but the originator sent it to me 1 day before it was due) so I've decided to continue looking for a better interest rate.

I went to Standard Bank, who I have banked with for 13 years (I changed my salary to FNB about 2 months ago, though, and did mention I'd be willing to change it back if they could offer me better interest) and was told straight away to not even bother trying to apply with Standard Bank.

I spoke to a consultant from SA Home Loans who checked my credit rating. She said it was fairly low due to the fact I have no store cards, car payments and have only had a credit card for 3 months (which I pay in full on the 1st of every month). Clearly this is the reason why the interest banks are charging is so high, but shouldn't it make a difference that I am able to pay a 25% deposit?

Due to my credit rating, what kind of interest can I hope for? Was FNB's offer of prime +2% as good as it's gonna get?

If anyone has any experience with SA Home Loans, please share, particularly in regards to the Edge home loan they offer. I don't know anyone who has gone through them, but from what I've found online they seem quite promising

Thanks!

Those rates are high. I would not be happy with that either...but I do think it is because you hardly have any debt and have only had your credit card for 3 months. Banks want to see your payment history as that is the only thing they have to determine how your work with your money and 3 months doesn't give them much history to go on.

I have been in contact with SA Home Loans recently and they were very helpful. They were quick to answer my emails, gave me all the information I needed when I asked for it and they gave me the best rate. What rate did SA Home Loans give you, given your credit score?

I have heard that you can renegotiate your interest rate with the bank, but I think that's only after a few years of having your bond. Are you absolutely set on buying a property now? Why don't you consider waiting a few months until you have more credit history and could potentially get a better rate then?
 

stricken

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You could take the FNB +2... pay for a year or two, then move it to another bank at a better rate.
 

schuits

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Also for what it's worth.
Having multiple credit checks in a short period of time negatively effects your credit score. Crazy I know.
 

nexxus

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Going through the originator isn't as bad as all that, when I applied she shopped it out to a bunch and then presented the lowest offer back to the other banks. ABSA bit and lowered their offered rate.
 

nexxus

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Does that ever work out, I've got Prime -.25%, I've gone back to FNB, 3 or 4 times and they've declined to even match ABSA despite the fact that I do all my other banking through them.
 

Darynv

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This is the most farked up thing with the current system, if you have no credit history, you can't loan money, or struggle to. Even putting down a hefty deposit doesn't show the banks that you are financially capable. I advised a mate that came back from the UK, therefore NO credit history, just get an account, even if you can afford an item and use the account to get your credit score up. takes self control but we do the same.
 
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PsYTraNc3

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I put in an offer to purchase recently and the first bank my originator applied with was SB.
Got a rate of +1.75 which is way too high.

FNB is ready to give me their quotation but cannot release it because the building contractors NHBRC certificate has expired!
Now I have to wait for that to be renewed.
 

Muttley

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I used to work with an F&I- she said that apparently opening an Edgars account is a good way to boost your credit score. Seems strange but apparently works.
Not sure how much time you have to try implement this.
 

Muttley

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Does that ever work out, I've got Prime -.25%, I've gone back to FNB, 3 or 4 times and they've declined to even match ABSA despite the fact that I do all my other banking through them.

Had the exact same experience.
I told them that I'd switch if they matched my ABSA rate and paid for the fees to switch but they refused on all fronts.
 

GhostSixFour

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Got approval in the last month - +.75% - first time home buyer, 0% deposit and they granted me 120% loan.....
 

Gaz{M}

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Credit history is just one factor.

What is your take home salary? Monthly expenses? (I don't expect your to tell us) What is left over at the end of the month? Your home loan is not supposed to be more than 30% of your gross pay per month, so e.g. R10 000pm on a gross of R30 000pm.

On R450 000, your bond would be +-R5000 pm. Add insurance (R300), rates and taxes (+-R500), water and lights (+-R1200) and that takes you up to a minimum of R7000pm.

If that's all your current "left overs" at the end of the month, then the banks will give your high interest rates.

But anything over prime + 2% is really going to cost you a fortune over 20 years.

It is NOT easy to renegotiate your home loan rate later - the banks say no thanks, why should we give you a discount.

If you move your home loan to another provider, you will pay bond registration fees again (R15000+). It's hard to justify.

I know this info is not that helpful, but something to keep in mind.

Also, have you budgeted for bond and transfer duties and fees? (Ok, no transfer duty on <R750 000 property), but there are other fees.
 

Napalm2880

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This is the most farked up thing with the current system, if you have no credit history, you can't loan money, or struggle to. Even putting down a hefty deposit doesn't show the banks that you are financially capable. I advised a mate that came back from the UK, therefore NO credit history, just get an account, even if you can afford an item and use the account to get your credit score up. takes self control but we do the same.

Agreed. It's a completely messed up system. I put down a R1mil deposit on a R1.4mil property and Absa wanted to charge me Prime+3% on a R400 000 bond. Told them to get stuffed.

My understanding is that your deposit and current income affect the AMOUNT you can borrow. While store cards, cell contracts, vehicle finance, personal loans, and credit history affect the INTEREST rate at which you borrow. I suspect they go back 3 to 6 months on your credit score so you'll need some time to 'fudge' their calculation.
 

calgal90

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Got approval in the last month - +.75% - first time home buyer, 0% deposit and they granted me 120% loan.....

Geez, what bank was this and how much was the loan? That is a fantastic interest rate for a large bond percentage!
 

GhostSixFour

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Geez, what bank was this and how much was the loan? That is a fantastic interest rate for a large bond percentage!

I never applied for the 120%, just applied for the R1m odd.. They offered it themselves. From FNB..
 

Kerrits

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An estate agent told me that when you are filling in the application, the expenses you fill in are the fixed expenses. Stuff like cell phone and insurance. Not groceries or those.

When I applied for a bond on a second place, I knew things looked bad for me. I ended up writing a motivation why they should give me a loan. I listed things like how much I saved in how short a time, some increase letters showing that I was good at my job etc. Essentially telling them they would be fools to pass up on a no-risk client like myself. I don't know how big an influence it had, but I got a sub prime rate.
 

Chevron

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An estate agent told me that when you are filling in the application, the expenses you fill in are the fixed expenses. Stuff like cell phone and insurance. Not groceries or those.

When I applied for a bond on a second place, I knew things looked bad for me. I ended up writing a motivation why they should give me a loan. I listed things like how much I saved in how short a time, some increase letters showing that I was good at my job etc. Essentially telling them they would be fools to pass up on a no-risk client like myself. I don't know how big an influence it had, but I got a sub prime rate.

That's awesome actually.
 
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