Mortgage Bond Loans

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.

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 our bond originators, they can help guide you.

APR

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 our bond originators.

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 Originator Duties

Assessing the market to find a mortgage bond product that fits the clients needs at the lowest possible interest rate. Applying for a lenders agreement in principle (pre-approval). Gathering all needed documents (payslips, bank statements, etc.). Completing a lender/bank application form. Explaining the legal disclosures. Submitting all material to the multiple banks and lenders.

 

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