How bond originators can save home buyers money

INTEREST rates might be on the rise but, if you are thinking of buying a home, working with a bond originator, who will negotiate with the banks to secure you a lower interest rate, can significantly reduce the amount you have to pay on your bond each month.

“This saving on your interest rate, called a rate concession, will have a noticeable impact on your monthly bond repayments,” says Carl Coetzee, chief executive of BetterBond.

Currently, BetterBond’s average interest rate concession, when applying to four banks, is 0.61%, says Coetzee. This means the interest payable on your bond could be 0.61% below what the banks would have offered if you applied to only one bank.

“For example, on a R2 million bond payable over 20 years at prime, an interest rate concession of 0.61% means a monthly saving of almost R740. So, instead of paying R16 112 each month, you would pay R15 374. Over the 20-year loan period, this amounts to a saving of more than R177 000.”

Even on a R1m home, the savings with a rate concession secured by your bond originator will be worthwhile.

“By paying an interest rate of prime minus 0.61%, the interest rate for your monthly bond repayment will be 6.89%. This means that instead of paying R8 056 each month, you would pay R369 less. Over the typical 20-year loan repayment period, this rate concession will amount to a saving of R88 520 in interest.

BOND originators can help get you better interest rates by approaching more than one bank on your behalf. PICTURE: RODNAE PRODUCTIONS/PEXELS