Get a Better Rate on Your Home Loan

(Accessed from www.realestateweb.co.za on 11 September 2008
Mike Spencer*
11 September 2008

With interest rates so high it is important to get the best possible rate on your home loan.

According to valuer and estate agent Mike Spencer of Platinum Global in Bloemfontein, you qualify for a discount when you have good credit records, high value bonds, high deposits and multiple bonds. Using numerous services at your lending bank and being a high-income client will also earn you discount.

He strongly advises anyone with a bond to ask for a discount. Only a few people ask for a better rate and simple accept the one given by the bank. Surprisingly you might receive and extra 0.25% or 0.5% discount if you do so.

Another tip is to talk to your bank about consolidating your loans. By doing this you will end up paying fewer fees, a lower interest rate and smaller bank charges.
Consolidating your loans with one bank will also result in lower cost and interest rates.

There is a government penalty tax on bonds over 80% up to 1.5%. By moving funds around you can reduce the very high percentage bond down to below this percentage.

Remember that banks will reward you for having more services at one bank. It would be wise to have your cheque and bankcard accounts at the same bank where you have your loan. Always ask your bank about the benefits should you bring all your business to them.

Mike Spencer also argues that it is wise to consider consolidating products such as Absa One. Here, the bank will approve an overall level of credit available to you and all your assets would be taken as security in return. This is a considerable saving in cost because they do not usually register a bond against your property.
You will then receive a chequebook, credit card and petrol card that is linked to this account. Each night your daily expenses are paid for from this account. This means that you live of a single account resulting in a low interest rate. You can also use this account to buy property, cars and live up to your credit limit. Everything you buy is cash, resulting in cash discounts. You will pay an agreed minimum and interest is at the bond rate less you discount.

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