Will My Interest Rate Change When I Apply For a 2nd Bond/Further Loan?

April 24, 2012

I get asked this question many times a day.  But can one really provide the answer in one sentence?

I can provide it in a word, and that is YES.

Your interest rate can most certainly change if you apply for an additional amount on your home loan.

Many simply don’t understand how it works because they reason they earn substantially more than they did when they initially applied for the bond, or that the value of the property has increased greatly due to the increasing value of the area or improvements that have been made to the property.

Unfortunately it’s not that simple, and I’ll try my best to explain to you what the guys in the know at Standard bank home loans have explained to us.

If you look at the market 4-5 years ago, just about everybody was getting interest rate reductions of 1.5 – 2.0% below prime, and the banks have had to honor their agreements with these clients, however, the rule is that when a new or another application is made, that the entire home loan account is re-calculated to the prevailing risk appetite of the bank.

This means, if the bank’s risk appetite is very low at this point in time or if they are borrowing money elsewhere at higher rates, they are unable to give large (or any) reductions on the prime interest rate.

This is especially true if they are borrowing money from international lenders because they are very risk averse when it comes to banks wanting loans to provide home loans to clients after the huge sub prime scandal in the US.

So, although this doesn’t provide a solution to the interest rate you might get, I’m hoping that this would give you more insight into WHY they can’t price what they used to.

If you are interested in applying for Standard Bank Home Loans, please don’t hesitate to contact us, the rate we’ll negotiate for you will the be THE lowest you’re able to get.

* information correct as per time of posting

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Home Loans Alternative

December 8, 2010

SA Homeloans:  Ever wondered why some banks approve applications while other banks decline them?  Why some banks give 100% bonds while others only give 85 – 90%?

The answer is quite involved, but I’ll try to explain. Regarding some approving and some not all depends on your personal credit profile as well as your internal bank rating and their internal rating system called the bank scorecard.

Your credit profile needs to be clear for a bank to approve your loan, and in addition to that you need to have a high enough credit score for them to approve.  Most banks require a credit score of 600+, so if you fail that first hurdle you might be declined.

Your internal record at the bank involves accounts you may have with that bank and how you have conducted those accounts.

The bank scorecard is an algorithm used by the bank combining all of the above factors and includes other “secret” criteria that the bank requires.

The banks scorecard is secret because thats what gives one bank an edge over another so they never disclose what the elements of the scorecard are – so next time you get a blank answer stating that you don’ t meet the bank’s minimum criteria, you know why.

Second point is that some banks give 100% loans and others not.

It really does depend where you bank.  Your own bank will always consider 100% but may give a lower offer, but here’s a quick snapshot of how it’s worked out – remember, the % is always a percentage of  the purchase price and not the value, except when it comes to a further bond or 2nd bond then it’s worked out on the value

These figures are based on a purchase price/further bond of under R1.5mil:

So I hope that clears up some confusing points regarding home loans in general, if you have anything further you are welcome to email us or call us any time.

* information correct as per time of posting


Home Loan approved….What’s Next?

December 7, 2010

Home Loans:  Okay, so the hardest part is over, the home loan is now approved, so what’s next.

Don’t get left in the dark, we’ll help you along the way in the home loans process.  For more information about the steps involved watch our latest video:  http://www.youtube.com/watch?v=R0R3SG_Sx40

* information correct as per time of posting


What Criteria is Needed To Be Approved for a Home Loan

November 25, 2010

If you’re looking for a home loan and are not sure if you meet the criteria needed to be approved, speak to a GPF Mortgage consultant.

With almost 10 years experience in getting SA Home Loans approvals for clients you can’t go wrong.

Also, watch our latest video post on criteria needed:

http://www.youtube.com/watch?v=bnZUbfKfv2M

* information correct as per time of posting


Calling all ABSA account holders

March 19, 2010

Courtesy of:  http://homepurchaseloans.blogspot.com/2010/03/calling-all-absa-account-holders.html

Are you an ABSA banking client looking for a home loan?

Until 30 April 2010 they’ll be offering special deals for individuals looking for home loans of R500 000 – R1 500 000 (excluding building loans, investment property, vacant lant, and fixed rates)

Although they haven’t disclosed what’s going to be making these deals so special, I’m guessing better interest rates.

If you’re one of those, don’t hesitate to contact us or click here for more information on ABSA home loans


The Home Loan Pre-approval Process

January 8, 2010

 To make sure of how much you can qualify for when applying for a home loan is to go through the home loan prequalification process. This is the first in formally applying for a home loan.

A prequalification is not a binding document and in many cases it is just a verbal estimate. It is an estimate of how much you can borrow based on your income.

A prequalification is not a loan guarantee and it is only as accurate as the information you have provided. Don’t try to overstate your income in the hope of qualifying for a bigger loan.

The lender won’t pull you credit record or commit themselves to what you can basically call a home loan quote. This is just a ball park figure to give you an idea of how much you can borrow.

If you’re serious on making an offer on a home you must complete a full application and the bank or your mortgage broker will need documents like payslips and bank statements during which time they will also confirm your employment and pull your credit record.

If everything is in order the bank will issue and AIP (approval in principle) which means that they are committed to give you a home loan as long as your credit or employment do not change for the worse.

Next, the lender will do a valuation on the home you would like to purchase and if they can find sufficient value in the property they will issue a final grant which means that your home loan is approved. The lender will instruct the attorneys to start with transferring and registering the property in your name.

 This process will take about two weeks and once you and the seller have signed the transfer papers it will take about another two weeks before the property is registered in your name.

For more information about home loans, visit:  http://www.gpfmortgage.co.za/contactus.html