Guiding consumers since 2009

Which bank offers the best home loan?

By Danielle van Wyk

Applying for a home loan can be a stressful experience – from filling out the paperwork to comparing the interest rates and navigating all the potential red tape. But it needn’t be.

Justmoney compared the home loan offerings between some of South Africa’s biggest banks to help you speed up the process.

Tip: Need help securing a home loan? Click here.


Let’s compare

The following comparison tables show the basic home loan offerings from Nedbank, Standard Bank, Absa, and First National Bank (FNB). It also compares the monthly service fees, initiation fee, cash deposit fee, and early termination process.

 

Monthly service fee

Initiation fee

Cash deposit fee

Early termination process

Nedbank

R69

R6037

R30 + R1.51 per R100

or part thereof

The early-termination fee is determined as three

months’ interest (based on your outstanding

balance, interest rate and remaining loan term). If the bond is cancelled before the 90-day period,

the pro-rata amount will be charged for the

remaining days.

Standard Bank

R69

R6037.50

R8,07 + R1,82 per R100,00 or part thereof

Should you wish to cancel your bond before the agreed contracted loan term, you are required to provide 90 days-notice in writing. If the required

notice has not been given or if it has expired you will be charged 90 days pro-rata interest based on your outstanding balance at the time of request for cancellation.

Absa

R69

R6037.50

R4,50 + R1,50/R100

If a large agreement (including all mortgage agreements) is cancelled, an early termination charge may

be levied equal to a maximum of 90 days’ interest, which will be reduced proportionately with any notice

period given.

First National Bank

R69

R6037.50

R10.95 (R20-R1000)

R13.95 (R1000-R3000)

An early termination fee is charged when a home loan

is cancelled without giving 90 days’ notice. The fee is

calculated based on the outstanding balance at your

current interest rate.

*The above information was correct at the time of publication

The results are in…

According to the results, the banks listed above all share the same monthly service fees, initiation fee, and early termination process. But the differences in cost are shown in the cash deposit fee.

Here Absa comes out on top as its deposit fees are the cheapest, while Standard Bank, First National Bank, and Nedbank trail behind.

According to an Absa in-branch consultant, another key metric for determining which bank is, in fact, offering the best and cheapest price is the interest rate. The interest rate determines the cost of the loan and affects your instalment price.

This, however, is difficult to compare on a general basis as the interest rate is often dependent on numerous factors. These include affordability assessments, the client's credit profile, current economic factors, and the loan amount and term.

Banks typically implement variable interest rates based on this. For example, Standard Bank offers up to 20% interest on a maximum of a 20-year loan term, while Absa offers a competitive interest rate of up to 10% with a maximum loan term of 30 years.

“If not fixed, the interest rate has the potential to fluctuate as the repo rate and other economic factors change,” says the Absa consultant.

What’s important to note is that consumers do have the option of fixing their interest rate which allows them the privilege of paying one staple interest rate for the duration of the repayment period.

There are however various advantages and disadvantages to this option too. To find out more, click here.

Shopping for a home loan?

If you’re in the market for a new home, here are a few things you should consider:

  1. Be clear about what it is you are looking for in a home. Ensure it meets your and your family’s needs, expectations, and lifestyle.

  2. Be realistic about what you can afford and the status of your financial and credit profile.

  3. Shop around for the best-suited offer.

  4. Should you venture outside of the banking institutions to other online lenders and institutions, ask questions and ensure that you are dealing with a legitimate entity.

Protecting your home is equally vital. For a free home insurance quote today, click here.

Recent Articles

Featured What are the three phases of money laundering?

Money laundering seems like the kind of thing that’s only a concern in blockbuster films. However, South Africa is, in fact, considered a hotspot for money laundering. So, what does this actually entail, and what are the consequences of this illicit practice?

Asset repossession: What banks want you to know

When you’re facing financial strain, it can be difficult to keep up with your debt. Unfortunately, if you refrain from paying your debt, your creditors have the right to take legal action against you. This includes repossessing your assets. But before you hand them over, here’s what you should know.

How to spend a lumpsum for great returns

Imagine you win the lotto. Anyone in this position would be ecstatic! But once your excitement settles down, you’ll have to consider what’s the best thing to do with this money.

How to identify an investment scam

Many people invest a lot of money for their future and that of their offspring. Unfortunately, some of them never reap the benefits because the investments were scams. Luckily, there are ways you can find out if an investment opportunity is too good to be true.

Deals

Get 50% off your friend’s treatment at Mangwanani Spa

Price: from R250
When: Until 30 August
Where: KZN and JHB

Telkom LTE lockdown Deal

Price: R369 per month
When: Until 31 August 2020
Where: Nationwide

Save up to 20% on your car insurance with MiWay

Price: Available on request
When: Daily
Where: Nationwide


Latest Guide

Guide to debt rehabilitation solutions