Why you shouldn't necessarily sign the first bond offer that you get

When it comes to getting a home loan, the first offer you get may not be the best offer. Let's take a closer look at why this is, and at all the advantages of giving yourself as many options as possible by using a bond originator to apply for your home loan finance.

Why don't the banks all provide the same offer?

It doesn't seem to make sense that various banks will receive the same information and make different decisions. However, each bank has a unique profile and a different appetite for risk. You may even find (especially if you are self-employed) that one bank may turn down your home loan application, while others offer you a loan with a subprime interest rate. You'll never know what's possible unless your application goes to all the banks through a bond originator.

Various factors go into each bank's decision on whether to grant you a loan and what interest rate to give you. These include market forces, your credit record and the size of the deposit that you have saved up. Each factor may be weighted slightly differently by the various banks - leading to different offers being made. If you have a strong credit score and a solid record of dealing with one of the banks, then that bank may also offer you a preferential rate.

Why is it worth waiting for all offers before making your choice?

The various banks are likely to take different amounts of time to get back to you with their offers - and this is why it's important not to accept the first one until you've waited to see what the other banks have to offer you. You'll typically get all your responses from the banks within a couple of days of each other (or even on the same day) but they won't come all at once. 

For example, let's say you've applied to Banks A, B, C and D. Bank A may be the first to get back to you - with an offer of prime +1. If you have used a bond originator, you still have at least three chances to get a subprime offer. It's therefore extremely worthwhile to wait and see what your best offer proves to be before you sign on the dotted line.

All the advantages of using a bond originator

Over and above having your paperwork (that you fill in just once) sent to multiple banks has more advantages than simply giving you more chances to get a great interest rate. There are many other great reasons to use a bond originator:

• Your bond originator will help you gather all the documents you need and make sure nothing is missing.
• They will leverage the relationships they have with the banks to get you the best possible deal.
• Using ooba's prequalification tool, you can get a precise idea of what you can afford before you start house hunting.
• Bond originators get paid by the banks - which means their service is free to prospective property buyers.
• Bond applications done through a bond originator have a higher chance of being accepted than applications sent directly to a specific bank. 
• You are also likely to get an answer on your home loan application faster than if you applied directly to your bank.

Signing your bond documentation is just one of the steps in the process of becoming a homeowner. We're ready to help you on your home journey, from finding the right property to receiving the keys. Contact us today for more information about buying and selling property in South Africa.