The South African home loan market has grown rapidly over the past five years. In fact, the home loan market in South Africa has grown so popular among lending institutions, that consumers are now almost spoilt for choice, when it comes to applying for a home loan.
First National Bank, ABSA, Nedbank and Standard Bank are still the four largest home loan lenders in South Africa. But other large companies are putting increased pressure on the four big South African banks, as far as home loans are concerned. For example, Sanlam Home Loans and Old Mutual Home Loans are growing very fast, while Standard Chartered Bank, a London based international bank, is also offering home loan products to South Africans nowadays.
With such a wide choice of home loan products, it is becoming more and more important that you ensure that you're getting the best home loan deal out there.
Choose Your Home Loan Wisely
For many people, their home loan is their largest single liability. That is why it is very important that you carefully consider the different home loan products and interest rates available to you. Because home loan interest rates fluctuate, and because home loans in South Africa are almost exclusively variable interest rate home loans, be sure not to overextend yourself.
Consider Home Loan Affordability
Typically, banks will only offer you a home loan if the monthly home loan repayments are less than 30% of the joint income for your household. If you need a larger home loan, you may want to consider reducing your current monthly liabilities (debts) before you apply for a home loan.
Types of Home Loans
There are currently many different types of home loan products offered by various banks and other lending institutions in South Africa.
One of the most recent types of home loan products on the market in South Africa is one which consolidates all your debts into one low interest debt, in the form of a home loan. You can speak to a home loan consultant of your choice, to find out exactly what the benefits of this kind of home loan is. But remember that there are also some negative aspects to consolidating small debts into a home loan.
With a home loan, there are all kinds of costs involved, which the individual small debts don't have. But the lower interest rate on home loans might still make consolidating debts in a home loan attractive to some people.
Home Loan Choice
Many South African property buyers are still reluctant to shop around for the best home loan product for their specific needs. But with the wide variety of home loans to choose from, South Africans are catching on to the fact that lending institutions are competing for their business, and that this means better interest rates, terms and flexibility.
