Mortgage Bond Loans In South Africa
Things to Consider on Mortgage Bonds
1. Down Payment on bond
As a general rule of thumb, banks or lenders will be seeking additional funds from you of around 5% to 10% of the total home loan loan value. This can be negotiable, and there are many mortgage bond packages available.
2. Fixed Rate Versus Adjustable/Variable
Fixed versus Adjustable rate? The two most common mortgage bond products available for home loans are fixed rate versus adjustable rate. Fixed rate means that you agree on an APR (annual percentage rate) that does not change through the life of the mortgage bond, whereas, an variable rate Mortgage, better known as an ARM, means that rates and monthly payments can change, often tied to the South African Reserve Bank "index", with the frequency of change dependent upon the terms of the mortgage loan.
Deciding on which way to go involves many variables. We suggest that you start by studying the fixed rate products available on the home loan market. They are by far the most popular, and arguably with the least amount of risk. After evaluating several preliminary mortgage bond offers (quotes) for fixed rate home loans, you can then venture into the world of ARM's to see if one of these products may be right for you. But, proceed with caution, and understand all the risks, alongside any potential benefits. Better yet speak to a bond originator, they can help guide you.
Known as the annual percentage rate, aka: "rate", is arguably the most important consideration you must study when looking for a mortgage bond. The APR includes principle, interest, "points", fees, PMI (bond insurance), and other costs associated with the loan. While all costs and terms are significant and affect the bottom line, we suggest that you speak to your bond originator.
4. Bond Loan Types
There are several standard bond loan products to look for, including 30 year fixed, 15 year fixed, bi-weekly mortgages, 1 month ARM's, 5 year fixed ARM's, 2nd Fixed, ARM's with a provision to convert after 5 years, lender buydowns, and discounted bond mortgages.
Bond Originators : Until now, Standard Bank required a deposit of 5% to 10% on property purchases valued up to R1.5m. Standard Bank is the first of the big four banks to officially announce the long-awaited move back to the traditional 100% home loan offering.Standard Bank Home Loans