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A Fin24 user wants to negotiate his interest rates on a property before he applies for a home loan. He writes:
I asked my bank for a quote on what my interest rate would be. I was told that I should use the online calculator as this is accurate.
However, they will only do a full credit check and put in the actual application once I have made an offer on a property.
My issue is that at that point I may be unhappy with their offer and wish to shop around at other banks. However, this could take time and I could then lose the property.
Is there a way I can determine rates with a bit more certainty, so that I can negotiate beforehand?
Mari van Wyk, Korbitec executive manager: customer relationships, responds:
When it comes to interest rates, there is unfortunately no way of guaranteeing what percentage you will be offered until a full home loan application has been submitted to a financial institution.
Should you choose to work through a mortgage originator, you may be able to obtain a pre-approval certificate. This certificate is not a guarantee of what home loan you will be granted, but by taking into consideration your income and expenses, you will be given an estimate of the home loan that you might be offered.
As part of this calculation, a mortgage originator will often make use of an “average” interest rate, meaning it will not be based on the highest or the lowest interest rates available in the market.
Therefore, even with a pre-approval certificate, the exact interest rate for your loan will only be established once an offer to purchase has been made and a full application has been submitted.
In terms of affordability, making use of an online affordability calculator or online bond calculator such as those found on Property24.com can give you an initial idea of what you can afford as well as the necessary bond repayments based on the cost of a property.
A mortgage originator can also offer a more in-depth view by making a more detailed analysis of your income and expenses.
- Fin24
I asked my bank for a quote on what my interest rate would be. I was told that I should use the online calculator as this is accurate.
However, they will only do a full credit check and put in the actual application once I have made an offer on a property.
My issue is that at that point I may be unhappy with their offer and wish to shop around at other banks. However, this could take time and I could then lose the property.
Is there a way I can determine rates with a bit more certainty, so that I can negotiate beforehand?
Mari van Wyk, Korbitec executive manager: customer relationships, responds:
When it comes to interest rates, there is unfortunately no way of guaranteeing what percentage you will be offered until a full home loan application has been submitted to a financial institution.
Should you choose to work through a mortgage originator, you may be able to obtain a pre-approval certificate. This certificate is not a guarantee of what home loan you will be granted, but by taking into consideration your income and expenses, you will be given an estimate of the home loan that you might be offered.
As part of this calculation, a mortgage originator will often make use of an “average” interest rate, meaning it will not be based on the highest or the lowest interest rates available in the market.
Therefore, even with a pre-approval certificate, the exact interest rate for your loan will only be established once an offer to purchase has been made and a full application has been submitted.
In terms of affordability, making use of an online affordability calculator or online bond calculator such as those found on Property24.com can give you an initial idea of what you can afford as well as the necessary bond repayments based on the cost of a property.
A mortgage originator can also offer a more in-depth view by making a more detailed analysis of your income and expenses.
- Fin24
