How to get a lower rate on your home loan

Nine points to consider when negotiating with the bank

You can save more than R220 000 if your rate is dropped from prime less 1% to prime less 2%, on a R500 000 loan, over 20 years. Here's how:

Home loan. If you have a good track record and ensure your monthly payments are on time and up to date, the bank is more likely to lower your rate. In addition, if you plan to move your mortgage bond to another bank, you will not be allowed to if you have missed a payment in the last six months.

Extra money. Any additional funds (such as a bonus or unexpected windfall), which you can deposit in to your bond, will make a difference when the bank is evaluating your rate.

Other accounts. When the bank is considering offering you a lower rate, it will check the payment profile of your other accounts, such as car finance, store cards and overdrafts. Make sure there are no amounts outstanding on your accounts, as this will affect your credit rating and your chances of the bank revising your rate.

Financial circumstances. Your rate is set on the bank's perceived risk of your financial situation and when your circumstances change, you can negotiate with the bank to adjust your rate. A change in your credit rating or a higher salary will mean the bank is more likely to lower your rate.

Property values. One of the factors used to determine your bond rate is the size of the loan compared to the value of the house. As property values rise, it will become easier to negotiate with the bank for a lower rate.

Timing. Some banks advise you to approach the bank about three or four years into your bond. By this time, most initial costs have been redeemed and the bank is in a better position to adjust your rate.


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