Image of a smiling woman with boxes in a new home for an article on moneysmart about the bond application process

The Bond Application Process

02/04/2013 • • by
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Searching for and then buying the perfect house can be a tiresome and stressful exercise. And the bond application process can be as complicated as finding that perfect house for you and your family. This article is about the bond application process and allocating money to the important decision of buying a house. Finding the right house, means finding a house that fits into your budget. It’s always good to look for a property that is slightly less than your budget, so that you account for duties and taxes, and possible renovations needed. Banks generally don't like to lend the whole amount; they prefer it if you put down an initial payment on the house. moneysmart tip: A 10% down payment is common, but making it 20% reduces the loan amount and your monthly installments. To raise this initial payment it’s important to start saving for a house well before taking the decision of buying one. Then the bond application process begins. Bond Origination You can apply for a home loan directly through your bank or through a bond originator. Bond originators assist you with your bond application in every way; they provide you with useful information, negotiate interest rates on your behalf and help you to get a loan. Companies like Ooba, Better Bond, Property Loans or SA Home Loans, provide their services free of charge, but get paid a commission of roughly 1% to 2% of the loan amount. Bond originators are very popular in South Africa as they know the banking processes inside out and are able to speed up the bond application process. Bond calculators provided by the originators explain the repayment structure of the loan. Getting the Best Interest Rate The banks decide on interest rates for the loans on a person-to-person basis, so there is a way to make sure you get a better interest rate than others. It all comes down to maintaining a good credit scorePaying your loans on time, no debt obligations and good financial decisions define your credit score. A good credit score can mean a lower interest rate on the home loan. This will result in you paying less for the borrowed money and hence paying off the loan in a shorter period of time. Another aspect is to understand whether your interest rates are fixed or variable, and how the two differ from each other. Also making sure that you only have one loan at a time makes it easier to pay off that loan. Home loans are long-term commitments, so it is always better to tackle them without the pressure of other major loans. In Conclusion The bond application process comes down to making educated decisions.  Solid research about the houses you can afford and want to buy, the bond originators, the initial payment amount and the monthly repayment amount is crucial. It is essential to find trustworthy estate agents and helpful bond originators to make the bond application process hassle-free. moneysmart tip: Friends who have gone through this process in the recent past can be of great help in suggesting reliable institutions and guiding you through the stress towards your dream home. So ask their advice!

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