The process of applying for a home loan can be involved and often time-consuming, which is why so many would-be homeowners choose to make use of a bond origination company to assist them, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
He adds that bond originators have several services that will help buyers navigate the bond application process more efficiently. “As experts in their field, a bond originator will be able to assess the buyer’s financial situation and level of affordability, advise them on the best way to finance their new home, along with explaining all the different banks’ home loan options and assist with the paperwork when applying for a bond. They will also liaise with all of the major banks and will negotiate the best possible deal on the buyer’s behalf. And the best part is that the service is generally free for the buyer,” says Goslett.
The estate agent will receive a commission from the bond originator for referring a buyer, and the bank that grants the home loan will pay the bond originator a fee, once the bond is registered. “The buyer receives the added service of using a professional bond origination company, without having the pay any costs. It makes sense for buyers to use the strong relationship that bond originators have with the banks to their advantage,” says Goslett.
He adds that it must be noted, however, that while using a bond originator will simplify the process for the buyer and has several benefits, it doesn’t guarantee that a home loan will be granted. All lending by the banks will be subject to the home buyer’s affordability ratio and their willingness to repay the loan. “Regardless of whether a buyer uses a bond originator or not, they will still need to have a good credit record, have disposable income available, a deposit and additional money for the costs associated with purchasing a property,” says Goslett.
According to Goslett, there are numerous bond origination companies in the South African market, so buyers need to ensure that they choose to work with a brand that is reputable and respected in the industry, such as the BetterLife Group. “Make sure that the originator doesn’t request an administration fee, as this is not normally a fee that the home buyer would incur. Also, buyers are not obliged to sign any agreement with the bond originator. However, they will be required to provide them with all the required documentation and information as soon as possible,” he says.
Buyers will need to provide the originator with all their personal information such as their contact details and a copy of their ID document. They will also require the buyer’s banking details, financial information and a copy of their latest salary slip or audited financials if the buyer is self-employed. The originator will complete the bond applications and will submit them to the banks on the buyer’s behalf. Once the applications have been submitted to the banks, the buyer should hear from the originator in the next three to five working days, provided the information given is correct and accepted by the banks.
“Buyers must ensure that they are kept informed throughout the entire process from signing the offer to purchase, to registration and transfer. It is advisable to take each option the bond originator provides into consideration, taking into account the pros and cons of each of the bank’s products and the interest rate they are willing to give. There is no obligation for buyers to accept any of the offers that the bond originator comes back with,” advises Goslett.
He concludes by saying that bond originators provide a comprehensive and valuable service that will not impact buyers’ back pockets – using a bond originator will take the hard work out of the bond application process, without costing buyers a cent.