Switching Home Loans In South Africa
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In the recent years the financial institutions in South Africa have been battling over the control of the property market. This had brought new possibilities for the people who are using, or are interested in using home loans. Some of these include bridging finance, suretyship and switching. Here, we will deal with the last of the three.
Switching Home Loans
What exactly does this catchy phrase means? To put it simply, by switching, you are moving your home loan from one financial institution to another. Now, you might wonder, why should you do it? The reason for it is simple: by switching, you will be able to get a better interest rate for your loan.
Even a very small reduction, no bigger than 0.5 % can save you a lot of money. The figure will probably go into tens of thousands, and maybe even more. So, you see that this is might very well be a prudent thing to do. Another possible reason for switching is the possibility that the new financial institution will give you additional lending, based on your property.
The Costs
Although everything mentioned above make for a very strong reason to go for a switch, you must keep in mind certain things. It is more likely than not, that the financial institution that you have a home loan with at the moment have had penalty clauses introduced in your home loan agreement. This may means you will have to pay extra penalty interests if you decide to cancel your contract with that institution, that is, if you switch. These penalty interests are usually based on a 90 day, or three month interest you would regularly pay. This can at certain cases prove to be quite of an amount.
There are other costs involved, like the attorneys fees, bond cancellation costs and registration fees for home loans. Also, there are valuation fees, and administrative fees for registering the new bond. However, even with all this taken into account, making a switch is still a profitable option. Furthermore, because of the competitiveness of the market in South Africa today, certain financial institutions are even ready to give up on the valuation and administrative fees and even pay for a certain part of the process of registration. And when it comes to the above mentioned three month penalty interests, you should check does your financing company accept cancellation of home loans after a notice period. This might potentially save you an additional sum of money.
The Documentation Necessary
If you opt for a switch of your home loan, you will need to provide the new financing company with all the relevant documents, like copies of your pay slip, bank statements, personal identification documents, and everything else that is generally needed for proving affordability.
The home loan switch option can be great chance for you and your family to save a considerable amount of money, and if you take into consideration that certain financing companies are offering up to 2% lower interests, the choice for switching is really a no brainer. The savings are really huge.
Even a very small reduction, no bigger than 0.5 % can save you a lot of money. The figure will probably go into tens of thousands, and maybe even more. So, you see that this is might very well be a prudent thing to do. Another possible reason for switching is the possibility that the new financial institution will give you additional lending, based on your property.
The Costs
Although everything mentioned above make for a very strong reason to go for a switch, you must keep in mind certain things. It is more likely than not, that the financial institution that you have a home loan with at the moment have had penalty clauses introduced in your home loan agreement. This may means you will have to pay extra penalty interests if you decide to cancel your contract with that institution, that is, if you switch. These penalty interests are usually based on a 90 day, or three month interest you would regularly pay. This can at certain cases prove to be quite of an amount.
There are other costs involved, like the attorneys fees, bond cancellation costs and registration fees for home loans. Also, there are valuation fees, and administrative fees for registering the new bond. However, even with all this taken into account, making a switch is still a profitable option. Furthermore, because of the competitiveness of the market in South Africa today, certain financial institutions are even ready to give up on the valuation and administrative fees and even pay for a certain part of the process of registration. And when it comes to the above mentioned three month penalty interests, you should check does your financing company accept cancellation of home loans after a notice period. This might potentially save you an additional sum of money.
The Documentation Necessary
If you opt for a switch of your home loan, you will need to provide the new financing company with all the relevant documents, like copies of your pay slip, bank statements, personal identification documents, and everything else that is generally needed for proving affordability.
The home loan switch option can be great chance for you and your family to save a considerable amount of money, and if you take into consideration that certain financing companies are offering up to 2% lower interests, the choice for switching is really a no brainer. The savings are really huge.
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davidza
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