Whatever the current interest rate, it pays for homebuyers to always try to get a rate concession on their home loans, and the best way to do that is by enlisting the help of a top-notch originator.
That’s the advice of Stephen Whitcombe, MD of Firzt Realty, who says the in-depth knowledge that originators have about various mortgage products, rates and the lending process ensures that they are able to provide clients with tailored advice and optimal mortgage solutions that suit their individual financial circumstances – and give homebuyers the best chance of having their loan applications approved.
“Good originators generally have strong relationships with multiple lenders and, due to the volume of business they do and their understanding of the different credit requirements of those different lenders, they are often also able to negotiate better interest rates and terms than home buyers might be able to get from their own bank – even if those clients are private bankers with an excellent credit history.
“And that’s a vital service, especially in a high interest rate environment, because the difference that a 1 or even 0,5% percentage point interest rate concession that an originator may be able to secure can make a significant difference, not only to the initial affordability of a new home, but also to the overall cost of the property over the life of the bond.
“For example, at the current prime rate of 11,75%, the minimum monthly repayment on a 20-year bond of R2m would be R21 700, and the total cost of the home, including interest, would amount to R5,2m. But at an interest rate of 10,75%, the minimum monthly repayment would drop to R20 300, and the total cost of the home over 20 years would drop to R4,9m.”
A further advantage, he says, is that a lower interest rate also makes it easier for the homebuyer to qualify for a new loan in terms of the income required. At 11,75%, for example, a borrower would need a gross household monthly income of R72 300 to qualify for a R2m home loan, but at 10,75%, that requirement would drop to R67 700.
“This is why top real estate companies all work with a reputable originator. “Another big benefit of applying for a home loan through an originator includes the fact that they will handle most of the administration and paperwork involved and save the home buyer from having to prepare and submit separate applications to several different lenders in pursuit of the best home loan offering.
“Originators will further streamline the process by conducting upfront credit assessments and pre-qualifications to identify any issues that need to be addressed and corrected before the home buyer submits an application that could be rejected.
“In addition, they will review documentation and assist buyers to prepare accurate and complete home loan applications that can be submitted to several lenders simultaneously. They will then track and motivate the progress of each application as it goes through the banks’ review processes, which inevitably leads to quicker responses – and funding times – than prospective buyers can achieve through traditional banking channels.”
Issued by: Firzt Realty
