Banks are launching new home loan interest rate options hoping to woo new customers and maintain old customers.
First National Bank this week launched a bond repayment option which offers a competitive interest rate and combines it with a reducing rate option. The option applies to loans above R100 000 with a further reduction for loans above R250 000.
Where the loan to the current value of the property is 80 percent and where the loan is above R250 000, you can get an interest rate of 17,5 percent for the first six months and 16,5 percent for the second six months.
Loans under R250 000 qualify for a rate of 17,75 percent for the first six months and 16,75 percent for the second six months.
Standard Bank last week introduced two interest rate options. You kick off with an interest rate of 18,75 percent for 12 or 18 months.
Interest rates decrease by 0,5 percentage points every three months.
This means the final rate for the 12-month option is 17,25 percent and the 18-month option 16,25 percent.
You get a bonus reduction of 0,5 percentage points if you take ownership of a property at the time you apply for the loan.
If you take out a loan of R400 000 or more, you also qualify for the 0,5 percentage point reduction.
Your starting interest rate is 18,25 percent. The final rate will be 16,75 percent for the 12-month option and 15,75 percent for the 18-month option.
You should opt for one of these interest rate options if you want to know what you will pay in interest over a fixed period.