A mortgage bond switch is a process of moving your mortgage bond from one financial institution to another.
We have a look at what you should bear in mind when considering a switch, and whether this could be the right move for you.
The benefits of switching
Nondumiso Ncapai, head of products at Absa Home Loans, notes that with so many competing South African banks, a range of mortgage bond rates are on offer.
“Many people tend to have a high rate on their mortgage bond initially, and later shop around to reduce that rate. The benefit to this is a reduction to your monthly instalment, and the overall repayment amount,” says Ncapai.
Another point many consumers consider when switching providers is the quality of service that they currently, or will receive. Reliable service forms a big part of a healthy relationship with your bank.
Potential obstacles to consider
When switching your bond, the transactional costs will depend on the value of your loan. You will also need to consider the cost of an attorney to re-register the bond. This will be done at the deeds office.
“There are also fees that come into play when closing an account. Sometimes consumers forget to give notice of bond account closure, and because of this, early termination fees are applied,” notes Ncapai.
The advantage of staying
“Many banks offer rewards for consolidating your portfolio with them”, says Ncapai. These rewards can range from higher interest rates for savings, to lower transaction fees.
Sticking with your own bank also makes it easier to move money between your bond and cheque accounts. Furthermore, the bank can use your transactional history to create tailored solutions for you.
The process of switching
All of the information needed for a switch can be found on the relevant bank’s website, including bond calculators. You may be asked to supply a valid ID, proof of income, and three months’ worth of bank statements.
“You’ll require less documentation if you are already a customer of the bank from whom you’d like a loan,” says Ncapai.
Once the application process is complete, you will either be contacted by email or telephonically. The next step will be an evaluation of your property, based on which the bank will determine the loan amount it’s willing to offer. Finally, the bond will be re-registered at the deeds office.
Final points to consider
All mortgage bond account holders should review their financial situation at regular intervals, notes Ncapai. “It could be that you can pay more into your mortgage bond. This gives you negotiation power with the bank,” she says.
For more visit: www.justmoney.co.za
