How to get banks to compete for your home loan
A reason why around 50% of all bonds in South Africa are now processed by originators is due to mortgage applications being submitted to multiple banks – and the institutions are acutely aware of the direct competition.
This is according to Shaun Rademeyer, CEO at BetterLife, South Africa’s biggest mortgage originator, which receives 25% of all new home loan applications.
“We submit the client’s bond application to multiple banks, including the client’s own bank, at the same time,” he says. “This reinforces competitiveness as banks are aware that where an originator submits an application there are also other banks competing for that business.”
Go alone at your peril
He says that when an applicant submits an application to their own bank first, and upon decline then submits to other banks, the other institutions are informed of the decline and take this into consideration when reviewing the application.
“Using an originator also allows the home buyer to receive multiple offers from different banks at the same time, enabling them to make a more informed decision,” he says, boasting that the originator has a 70% success rate of bond applications submitted.
As specialists in the home loan industry, bond originators such as BetterLife will assist from the outset with an overall assessment of your financial situation, creditworthiness, and affordability.
“We do a credit check to ensure that, as a home buyer, you’ll receive the credit you wish to apply for and advise you, based on the pre-qualifying amount, what deposit you require,” says Rademeyer. “We then assist you in completing the necessary documentation, guide you through the process and, of course, negotiate the best interest rate on your behalf.
A free service – no, really
“Perhaps most importantly is the fact that there is no fee attached to utilisiing a bond originator to secure your home loan for you. Banks remunerate bond originators, or whichever institution advances the loan. These costs are not passed on to the client and our services are entirely free of charge.”
The process of applying for a home loan has become increasingly complicated with obstacles such as the Financial Intelligence Centre Act (FICA) and the varied and more stringent requirements placed on financial institutions.
“Among other things, bond originators know what an applicant needs to successfully obtain a home loan,” says Rademeyer. “One of the advantages of dealing with an experienced bond originator is that we are able to structure the bond application to maximise its chances of success. We are also aware of all the banks’ products and how their criteria vary, what they are looking for and we are able to supply the correct information in the correct manner, removing issues of time and red tape.”
What’s more, and as important, is that commitment and good service are assured because bond originators only receive payment from the banks for approved applications and ultimately happy clients.
Other advantages of using a bond originator
All the necessary paperwork is managed for you. You simply need to submit your proof of earnings and bank statements to the originator. They will then setup your application to ensure the process is a smooth one.
You won’t need to figure out the different jargons included in your bond agreement because your bond originator will be there to explain it to you.
Applications to multiple banks can be made instantaneously, saving you time and the inconvenience of doing it all yourself.
The bond originator has relationships with multiple institutions, which means that you, as the consumer, have a greater choice.
The originator on your behalf, saving you time and money, conducts follow-ups with banks.
As the customer, you always have the choice. After reviewing the final bond grants from the banks, you decide which one you want to use.
Because originators have strong relationships with all the major banks they are often able to negotiate a lower rate on your bond – which could save you thousands over the term of the home loan.