Until just a couple of years ago, if we wanted to buy a home, we would personally approach our bank for a bond. But thanks to the growing popularity of bond originators in South Africa, we can now leave this cumbersome task in their capable hands.
"Bond origination was a major disruptor in the real-estate industry when it was introduced, and it has proved to be a true consumer champion," said Rudi Botha, CEO of bond-originator company BetterBond.
"Not only did we take the hassle out of applying for a home loan and reduce the time it takes to be approved, but we also gave prospective buyers a way to ensure that they were being offered the most favourable loan package and interest rate."
Botha said the rate concessions they often negotiate are bigger than 0.25 percent, saving home buyers thousands of rands. At an individual level, he said, a good example is that a rate concession of just 0.5 percent on a R1-million home loan will save the homebuyer around R80,000 worth of interest over the 20-year life of the bond.
But the rate concession is just one of the reasons that prospective buyers should consider making use of originators. Others include the following:
- A higher rate of success
Bond originators have a much higher rate of success when it comes to getting home-loan applications approved and enabling prospective buyers to finalise their home purchases. "In BetterBond's case, our average approval ratio is 75 percent, which compares very favourably to the current average approval ratio of 35 percent among prospective buyers who apply directly to their banks – and enables more than 34,000 people a year to buy their dream homes."
Bond originators manage the whole home-loan application process on behalf of the prospective borrower, from completing application forms and collating supporting documents to writing individual loan motivations and submitting applications to multiple banks. "This means that their clients don't have to spend time researching, evaluating and trying to compare the home-loan offerings of various banks – or taking all their paperwork from bank to bank in their efforts to secure a home loan," explained Botha.
- Shorter response time
Bond originators can usually get home-loan applications processed in just a few days. They motivate and monitor the progress of each application, so that they can keep clients informed and shorten the wait for an answer.
- Pre-qualification advantage
Bond originators can also arrange for prospective buyers to obtain home-loan pre-qualification certificates that give them a good idea of their purchasing capacity and enable them to focus only on homes they can afford, while also giving home sellers a greater level of comfort in accepting their offers to purchase.
- Issues that can block your loan application
Bond originators are also able to identify issues that might prevent prospective buyers from obtaining a home loan and suggest how these can be rectified before they submit an application. "They might advise the buyer to save a bigger deposit, for example, or to clean up their credit record so that they can improve their chances of their application being approved at a favourable interest rate," said Botha.
- The best home-loan offer
Bond originators are able to assist home sellers who are planning to upgrade to canvass other banks in addition to the one where they have their current bond, so that they can be sure of getting the best home-loan offer.
It is also important to note, said Botha, that bond originators do not charge consumers for their services, and that the bank fees to register a new loan are the same regardless of whether the client approached the bank directly or through an originator.