The bond origination industry in SA has put billions of rands back into home buyers’ pockets since its inception about 18 years ago – and continues to do so…
It has also helped hundreds of thousands of people to realise their dreams of home ownership.
“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,” says Rudi Botha, CEO of BetterBond, SA’s biggest originator.
“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.
“And since then we have helped homeowners save billions. In an average year, BetterBond clients are granted about R35bn worth of new home loans, and an interest rate concession of just 0,25% on those loans alone is worth around R1,5bn. Add in the loans granted through the other bond originators and the fact that the rate concessions we negotiate are often bigger than 0,25%, and the extent of the savings we have achieved for home buyers over the past 18 years becomes clear.”
At an individual level, he says, a good example is that a rate concession of just 0,5% on a R1m home loan will save the homebuyer around R80 000 worth of interest over the 20-year life of the bond.
However, he says, that is just one of the reasons that prospective buyers should all be making use of originators. Others include the following:
1. 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%, which compares very favourably to the current average approval ratio of 35% among prospective buyers who apply directly to their banks – and enables more than 34 000 people a year to buy their dream homes.”
2. Manage the whole process
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,” says Botha.
Bond originators can usually get home loan applications processed in just a few days, thanks to the fact that our highly trained consultants don’t just leave things to chance. They motivate and monitor the progress of each application so that they can keep clients informed and shorten the wait for an answer.
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, he says.
5. Identify potential issues
Bond originators are 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.”
6. Canvass other banks
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.
7. No charge
It is also important to note, says 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.