The right homeloan product for you?
Basically, all banks provide a homeloan from 10 to 30 years, repayable monthly at an interest rate margin lower than prime rate. But we are all different and our unique circumstances require unique solutions, especially when it comes to the most important long-term investment most of us will make. It is important to consider the different products offered by the major banks in South Africa, to allow you to select the one that best meets your requirements.
All banks provide ‘access’ facilities to spare funds in the homeloan account, as well as remote banking via ATMs and Internet. Debit order payments are the payment method of choice for all the banks. Other homeloan banking rules that are industry standard include those that apply to age and insurance. Banks have relaxed their criteria and will look at each application on merit, but as a guideline final repayment should not exceed 80 years of age. Although the specific life insurance rules differ, in general, life cover is compulsory on the smaller bonds under R200 000. You do not have to purchase life insurance from the bank but simply cede life cover to them if they insist on it.
All banks provide a 100% first time homebuyer’s bond to cover all bond costs and a re-advance (drawdown against an existing bond) or a further bond (a second bond, given that your house value has risen over time). Most banks will allow the registration of a bond in excess of the current value of the home so that, as the value rises and this can be proven, the bond can be drawn down with little extra documentation and fuss. You may adjust your repayment per month at any bank so as to pay off your homeloan faster. Banks will permit foreigners to purchase property in South Africa with a minimum 50% deposit.
There are some features of the homeloan products which are different. These differences are important to understand to ensure you get the right product for your homeloan requirements. It is advisable to get an expert on your side when making your decision. Bond originators can help you structure the best deal for your unique requirements. Look for a professional origination company with a banking background who understand the intricacies of the banks’ homeloan policies and procedures.
ABSA offers Multiplan, which allows the freedom to structure your homeloan account into separate accounts with their own terms and conditions, but they are all managed through a single account. The Platinum One product from ABSA is a private bank facility incorporating all of your accounts including your homeloan, while Smartmoves is an unusual add on which allows you to simply indicate that you need a Telkom fixed line and ABSA will contact Telkom on your behalf to expedite the installation.
First National Bank (FNB) offers their clients eBucks on all homeloan products as a client reward programme. The FNB One Account consolidates all accounts into one account including your homeloan, and provides a cheque book, cheque card and a petrol card. This facility is available to clients with an income of just R100 000 or more. FNB also offers Maternity Choice, a three-month, minimum 60% repayment option during pregnancy repayable over the next three years and Education Choice, a 100% of original homeloan amount to pay for tertiary education.
Nedbank’s Buy to Let investment product enables gearing to occur given that future rental income is taken into consideration when repayment to income is calculated. In other words, rent is added to income so you can borrow more and invest in property. iCon is the Nedbank private bank facility which consolidates many of your accounts into one facility.
Standard Bank offers Business Mortgage for financing residential properties which have been converted for business use.