Understanding Home Loans
A focused learning module to guide you step-by-step on your home journey.
Getting a home loan (bond) is one of the most critical steps in buying a property. Here's what you need to know about the process.
1. What is a Home Loan?
A home loan is a long-term loan provided by a bank to help you purchase a property. The property itself serves as security for the loan. Most home loans in South Africa are repaid over 20 or 30 years.
2. Interest Rates: Fixed vs. Variable
Variable Rate: The interest rate fluctuates with the prime lending rate. If the prime rate goes up, your monthly repayment goes up. This is the standard option.
Fixed Rate: The interest rate stays the same for a set period (usually 1-2 years), regardless of market changes. This offers certainty but often starts at a higher rate than variable.
3. Working with Bond Originators
What is a Bond Originator?
A bond originator acts as an intermediary between you and the banks. Instead of you applying to each bank individually, they submit a single application to all major banks (Standard Bank, ABSA, FNB, Nedbank, etc.) on your behalf.
Why use them?
- It's Free: The banks pay them a commission, so the service is completely free to you.
- Better Rates: They create competition between banks, often securing a lower interest rate than you could get on your own.
- Less Paperwork: You only fill out one set of forms.
- Higher Success Rate: They know exactly what banks are looking for and how to motivate your application.
4. The Application Process
- Pre-qualification: Know what you can afford before you shop. This checks your credit score and income.
- Formal Application: Once you have an Offer to Purchase, you submit your documents (ID, payslips, bank statements) to the banks.
- Credit Check: Banks assess your credit score, payment history, and affordability.
- Approval: You receive a "grant" or "approval in principle" detailing the loan amount and interest rate offered.
Toolkit
Interactive resources at your fingertips
Essential resources, templates, and checklists to help you on your home buying journey. Click View to explore each resource in detail.
Bond Application Checklist
ChecklistEssential documents and steps needed for your bond application
Pre-Qualification Checklist
ChecklistSteps to get pre-qualified before you start house hunting