What is Best Bank For Home Loans?
A sum of money borrowed from a financial institution or bank to purchase a house. Home loans consist of an adjustable or fixed interest rate and payment terms.
Best Bank For Home Loans In South Africa
Article summary:
- When it comes to finding the best banks for home loans in South Africa, a bond originator will tell you more than any customer satisfaction survey.
- An independent bond originator will compare home loans for you, giving you access to far more products than if you went direct.
- Because they are intimately acquainted with the industry, bond originators know which are the best banks for pre-approved home loans too.
The latest South African Consumer Satisfaction Index (SAcsi) results show that Capitec customers are the most satisfied, and that the bank’s clients, along with those of FNB, are the most loyal in the country.
The SAcsi 2016 satisfaction scores for South African banks were:
- Capitec – 83.1
- FNB – 81.3
- Nedbank – 77.0
- Absa – 74.2
- Standard Bank – 71.9
But ratings and scores are one thing. When it comes to applying for home financing, size of loan and interest rate are quite another. This is why, despite evidence that some banks offer better customer service than others, going direct for your home loan is never your best bet.
There are things a bond originator can tell you that no index ever will. The plain and simple truth is that you can’t know if you’ve got the best deal from a bank, if you’ve only approached one bank. You need to access choice and we can assist you with that simply.
Originators and affiliates are successful in securing home loan financing for one in every three applications that are initially turned down by a bank. In short, you have a far better chance of obtaining the thumbs up on your home loan if you go through a bond originator.
How to find the best bank for a home loan
Home loan interest rates may vary depending on the lending criteria of the bank, as well as the financial situation of the applicant. As such, it’s difficult to provide a definitive answer to the question of which bank is best for home loans, as it may be different for each applicant.
However, one can look at the general performance and customer satisfaction ratings for South African banks to get an idea of which ones have the highest quality service, and the best understanding of their customer’s needs.
The best bank for South African youth
A survey conducted by The Sunday Times found FNB to be the most popular bank among SA youth. This is particularly relevant to many prospective first-time home buyers looking to get onto the property ladder, as they are more likely to fall into the younger age groups.
As a first-time home buyer who lacks the necessary funds for a deposit, you can also apply for a 100% home loan (where your home is entirely funded by the bank, no deposit required). evo has a strong track record of securing 100% home loans for clients.
The best banks for customer satisfaction
The South African Consumer Satisfaction Index for the country’s retail banks, compiled by consulting group Consulta, serves as an invaluable guide for determining just that.
According to Consulta, it is the largest and most comprehensive survey of its kind for the South African banking sector.
The survey, published in early 2019, showed Capitec, FNB and Nedbank as the leaders in overall customer satisfaction, with Capitec and FNB also scoring high for customer expectation, indicating consistent performance levels over a prolonged period.
The most improved bank
Standard Bank showed the biggest improvement in customer perception, with an increase of +5.1 index points since 2016. Furthermore, they have recently introduced an innovative new price structure for home loans, where the loan is divided into three portions, each one being priced individually, with a decreasing interest rate in the 2nd and 3rd portions. As the client pays off their loan, the interest rate will gradually decrease over the course of the bond, resulting in significant long-term savings.
Can you get the best deal by applying directly through your bank?
Applying for a home loan through your private banker may not necessarily get you the best deal, as your banker’s first priority is to get the best deal for the bank. Furthermore, if the application gets rejected, you will either have to apply to a different bank, or wait around until circumstances with you or your bank change. Meanwhile, the clock is ticking on your offer to purchase, and you may end up losing the home you have your heart set on.
“There are things a bond originator can tell you that no index ever will,” says Mark Coetzee, Head of evo. “The plain and simple truth is that you can’t know if you’ve got the best deal from a bank, if you’ve only approached one bank. You need to access choice and we can assist you with that.”
If you are thinking of buying a home, evo offers a range of home loan calculators to help make the home-buying process easier. Get prequalified for a home loan, then, when you’re ready, you can apply for a home loan with evo.
Which bank has the lowest interest rate on home loans in SA?
It’s worth the effort to shop around for the best deal, as some banks may offer you better interest rates, and a higher chance of home loan approval.
How do banks determine interest rates?
The South African Reserve Bank (SARB) sets the prime interest rate, which is the basis for all other interest rates, including home loan interest rates.
The bank’s interest rate on your home loan is linked to the prime interest rate – either above or below prime, depending on your credit risk profile.
The current interest rate is the lowest it’s been in decades, thanks to a succession of interest rate cuts. This makes it a good time to buy, and to find a bank with a good home loan interest rate in order to take full advantage of the situation.
How to find the best bank for a home loans
Home loan interest rates may vary depending on the lending criteria of the bank, as well as the financial situation of the applicant. As such, it’s difficult to provide a definitive answer to the question of which bank is best for home loans, as it may be different for each applicant.
This is why it helps to employ the services of a home loan comparison service, such as ooba Home Loans. They can apply to multiple banks on your behalf, and help you secure the deal with the lowest interest rate.
Improve your chances of getting a low interest rate
The interest rate on your home loan depends largely on your financial circumstances. The less of a risk the bank perceives you to be, the lower your interest rate.
Out of the factors you have control over, the credit record is the most important. The bank uses your credit record to determine how much of a risk you are. You can improve your credit score by:
Paying off debt.
Pay bills on time.
Avoid owing more than a third of your gross income on debt.
Close accounts when you’ve paid the balance owing. This will count in your favour as it will indicate that you are at a lower risk.
You can get pre-approved with ooba Home Loans to determine your credit record, and your likelihood of qualifying for a home loan. This in turn gives you a good idea of how favourable your interest rates will be.
Which bank works with SA Home Loans?
We’re proud to partner with Capitec Bank, offering home loans to Capitec clients and putting more South African’s into their own homes.
SA Home Loans and Capitec have much in common. As two of the newer players in the financial services industry, both are growing through winning a legion of loyal new clients.
What is the current interest rate in South Africa for home loans?
As of April 2022, the prime lending rate in South Africa is 7.75%. It was increased by 0.25% in November 2021, and by another 0.25% in January 2022.
How long does SA Home Loans take to approve a bond?
Alternatively, contact your nearest SA Home Loans branch to begin the bond application process. All you’ll need is your South African identity document and proof of income.
Once all the necessary documentation is submitted, we will be able to complete the approval process within 48 hours.